Crypto Staking Taxes UK: Ultimate Guide for for 2024

Crypto staking enables UK investors to earn interest on their cryptocurrencies, but those staking rewards lead to income taxes in the UK, alongside other earned income like interest products, crypto mining, etc. Discover how staking rewards are taxed in the UK, how to report crypto taxes in the UK, and more in this guide!

What is Crypto Staking?

Crypto staking is a process where users of a specific blockchain/network contribute to it by allocating funds, guaranteeing its normal functioning, and boosting its security. In return, people who allocate cryptocurrencies to the network receive a share of rewards based on that amount and the reward rate that the project offers, like an interest product from a bank.

Proof of Stake – PoS

Proof-of-Stake (PoS) is a consensus mechanism that enables the creation of new units of a cryptocurrency without requiring mining (i.e., Proof-of-Work).

Staking Rewards

People who allocate funds to a network in a process called staking receive staking rewards (e.g., a share of the funds they allocated) as compensation.

How is Crypto Staking Taxed in the UK?

Here’s how crypto staking is taxed in the UK:

Tax Rates for Staking

Staking will be taxed at an income level when you receive the staking rewards, with the tax rates being the regular income tax rates in the UK. For 2024, the income tax brackets in the UK are:

Income Tax on Staking

Staking is taxed at an income level in the UK, with investors having to determine the Fair Market Value (in GBP) of all the staking rewards they receive during the year. The income from staking will be added to your total income for the year and then taxed according to the tax bracket you fall under, from 0% to 45%.

Capital Gains Tax on Staking

You can be taxed under capital gains taxes on staking if you sell your staking rewards after receiving them. You must determine the gain between the moment you sell your staking rewards (sales proceeds) and the moment you receive the rewards (Fair Market Value).

Taxes on Staking Rewards

Staking rewards are taxed in the UK at an income level and capital gains level:

• Income taxes: When you receive the staking rewards, you need to determine their Fair Market Value (in GBP) at that moment, and you’ll be taxed at an income level over those rewards;
• Capital gains taxes: If you later sell the staking rewards, you’d need to determine the gain because that cryptocurrency may have appreciated in value during the holding period. The cost basis is the Fair Market Value (in GBP) of the rewards when you received them.

How to Report Crypto Staking Rewards on Taxes

You have to report any income you’ve earned from crypto activities like mining, salaries, hard forks, airdrops, and staking rewards. You also have to report any gains/losses you’ve had from trading cryptocurrencies in a different form.

Tax Forms for Staking

In the UK, income from receiving staking rewards has to be reported on the Self-Assessment Tax Return SA100 form alongside other income (e.g., salaries) by the January 31 tax deadline. Gains and losses from crypto, like selling your staking rewards, have to be reported on the Capital Gains Summary SA108 form.

How to Calculate Staking Rewards?

You can calculate the Fair Market Value of your staking rewards by multiplying the number of units you received by the market price of that cryptocurrency (at that moment). This is hard to do manually, and you should use crypto tax software to make it easier, especially if you receive different batches of staking rewards throughout the year. For gains calculations, you need to subtract the Fair Market Value of the rewards when you received them (your cost basis) from the sales proceeds (i.e., the total amount from the sale of your staking rewards).

UK Cost Basis Method

You simply need to deduct your Fair Market value (in GBP) of your initial purchase (plus any transaction fees) from your total sales proceeds (at the moment of the sale) to calculate your cost basis using the UK method. If you have multiple transactions at different prices, you’ll have to calculate an average cost per unit according to the method outlined in the guide.

How to Reduce Staking Tax?

Here’s how to reduce your taxes on staking:

Tax Allowance for Crypto Stakers

In the UK, you pay no taxes if your total income doesn’t surpass £12,570, the personal tax-free allowance in 2024. On top of this, there is a miscellaneous income allowance worth £1,000 which can cover income in excess of this.

Capital Gains Tax-Free Allowance

The UK offers a tax-free amount of capital gains that you can have in a year. For 2024, that amount is £3,000. If you have gains from selling crypto (or other assets) that don’t surpass that threshold, you don’t need to pay taxes.

Offset Staking Losses from your Gains

If you have losses from selling your staking rewards, you can reduce your capital gains taxes with those losses. If you don’t have gains to offset in a particular year, you can carry forward losses, but you have to register them to the HMRC within four years.

Taxation of Crypto Staking in Other Countries

Australia

Receiving crypto staking rewards in Australia is considered taxable income and should be reported accordingly. Read more in our crypto tax guide for Australia.

US

Receiving crypto staking rewards leads to income taxes in the US, while if you later sell them, you’d also have to face capital gains taxes, similar to the UK. Discover more in our US crypto tax guide.

Germany

Crypto staking in Germany is taxed at an income level, but only if you surpass €256 per year in crypto income like staking. Discover more about crypto taxes in Germany.

Conclusion on UK staking taxes

Crypto staking is taxed at an income level in the UK, with rates depending on your total income for the year (including from cryptocurrencies). Reporting crypto staking taxes in the UK involves filing some tax forms, but before that, you need to track all the batches of staking rewards you received at their Fair Market Value (in GBP). The easiest way to do that is to use crypto tax software like CoinTracking, which automatically tracks the FMV of your staking rewards while generating the right tax reports.

Summary of Key Points

TL;DR about crypto staking taxes in the UK

• Income and gains from crypto staking are taxed in the UK;
• Receiving crypto staking rewards leads to income taxes while selling staking rewards leads to capital gains taxes;
• Income from staking has to be reported on the Self-Assessment Tax Return SA100 form;
• Capital gains from staking have to be included on the Capital Gains Summary SA108 form;

Crypto tax tools like CoinTracking can automatically track income and gains from staking while enabling you to generate the right forms to file your taxes.