Most crypto holders assume staking rewards are only taxed when they sell them. HMRC takes a different view, and the difference matters significantly when it comes to filing your tax return correctly.

This guide covers exactly how HMRC taxes staking rewards in the UK, why most crypto tax reports contain errors on this point, and what to check before you file.

How HMRC Treats Staking Rewards

HMRC published its position on staking in 2021 and clarified it further through Revenue and Customs Brief 9 in 2023. The guidance is clear: staking rewards are treated as miscellaneous income at the point of receipt.

This means the GBP value of your staking rewards at the moment they arrive in your wallet is added to your taxable income for that year. It is taxed at your marginal income tax rate, which could be 20%, 40%, or 45% depending on your total income.

The key point: this happens when you receive the rewards, not when you sell them.

The Double Taxation Effect

Understanding how staking rewards are taxed involves two separate events.

When you receive staking rewards, you have an income tax event. The GBP value at receipt is your income. When you later sell those rewards, you have a capital gains tax event. Your capital gain is calculated from the GBP value at receipt (your cost basis) to the sale proceeds.

Here is a concrete example.

You receive 0.5 ETH in staking rewards in October 2024. ETH is trading at £2,800. That is £1,400 of miscellaneous income, declared in the 2024-25 tax year.

You sell that 0.5 ETH in March 2025 when ETH is at £3,200. Your sale proceeds are £1,600. Your cost basis is £1,400 (the value already taxed as income). Your capital gain is £200.

You pay income tax on the £1,400 when you receive it. You pay capital gains tax on the £200 increase when you sell. Two tax events, one set of tokens.

Most people only report the capital gain. The income tax element is what gets missed.

Different Types of Staking: Different Rules

Not all staking is treated identically. There are three main scenarios.

Centralised exchange staking (Coinbase, Kraken, Binance)

This is the most straightforward. Each reward credited to your account is a separate income event. The GBP value at that date is your income for that transaction.

Koinly handles this reasonably well when your exchange is connected correctly. The most common error is staking rewards being imported as plain received transactions without an income classification, which means they do not appear in the income section of your report.

Native ETH validator staking

If you run an Ethereum validator or staked directly on the network, the timing of when rewards are received depends on when you had possession and control of the tokens. Prior to the Shapella upgrade in April 2023, ETH staking rewards were locked and could not be withdrawn. HMRC considers receipt to occur when tokens become withdrawable, not when they are earned. This means many early ETH stakers saw their staking income crystallise all at once in the 2023-24 tax year.

Liquid staking through Lido, Rocket Pool, and similar protocols

This is the most complex scenario and the one most frequently mishandled by crypto tax software.

When you stake ETH through Lido, you receive stETH in return. HMRC may treat this exchange as a disposal of your ETH. That means a potential capital gains event at the point of staking itself, before you receive any rewards.

Additionally, stETH rebases daily to reflect accumulated staking rewards. Each daily rebase is arguably a separate income event. If you held stETH for 365 days, that is potentially 365 separate income receipts.

Koinly commonly classifies ETH to stETH transactions as transfers rather than disposals. This is almost certainly incorrect under HMRC’s guidance, and it means a potential capital gain is going unreported.

If you have used any liquid staking protocol, those transactions need to be reviewed manually.

What to Check in Your Koinly Report

Before filing, run through this checklist.

Go to your transactions in Koinly and filter by the staking label. Confirm that every staking reward has a GBP value assigned at the date of receipt. Zero values mean missing cost basis and incorrect income figures.

Check your income summary page. Staking rewards should appear as a separate line under miscellaneous income. If they appear only in your transaction list but not in the income summary, they have been miscategorised.

If you used liquid staking, locate the token swap events (ETH to stETH, ETH to rETH, etc.) and check how they are classified. If they are labelled as transfers, that needs to be corrected.

Finally, sense-check the total staking income figure against your own estimate. If you staked for a full year and the income number looks unusually low, something is likely missing.