How to Report Crypto Staking and DeFi Income to HMRC in 2026
Earning staking rewards or DeFi yield? Here's exactly how HMRC expects you to report it — and the mistakes that trigger enquiries.
Koin Keepers · Published 18 February 2026 · 6 min read
Reporting Staking & DeFi Income in 2026
With HMRC tightening its grip on crypto reporting under CARF, getting your staking and DeFi income right has never been more important. Here's what you need to know.
Why staking and DeFi income matters now
Staking and DeFi have moved from niche activity to mainstream investment strategy. Ethereum's proof-of-stake transition, liquid staking protocols like Lido and Rocket Pool, and the explosion of DeFi yield opportunities mean millions of UK taxpayers now earn crypto income they need to report.
HMRC's Cryptoasset Reporting Framework (CARF), effective from 2026, means exchanges and platforms now share detailed transaction data with HMRC. If your self-assessment doesn't match what HMRC receives, you'll be flagged.
How HMRC treats staking rewards
HMRC's position on staking rewards depends on the nature of the activity. Here's how each type breaks down:
Proof-of-Stake validation (running a node)
If you run your own validator node, HMRC is likely to treat rewards as miscellaneous income. You're actively participating in consensus, which goes beyond passive investment.
- Taxed as income at the point of receipt
- Value determined at market price when tokens arrive in your wallet
- The tokens then have a cost basis equal to the income amount for future CGT purposes
Delegated staking (via an exchange or pool)
When you delegate to a staking pool or stake through an exchange like Coinbase or Kraken, HMRC currently treats this similarly to interest — as miscellaneous income.
Key point: Whether you stake directly or via a pool, the rewards are almost always income, not capital gains. The taxable event is when you receive the reward tokens, not when you sell them.
Liquid staking (stETH, rETH, cbETH)
Liquid staking tokens add complexity. When you deposit ETH and receive stETH:
- The swap may be a disposal for CGT purposes
- The rebasing of stETH (increasing balance) could be treated as income
- Unwrapping stETH back to ETH is likely another disposal
How to handle it: Document every liquid staking event separately. Record the ETH → stETH swap, each rebase event, and the eventual unwrap. Keep consistent treatment across tax years.
DeFi income types and their tax treatment
Yield farming
Depositing tokens into a protocol to earn rewards (e.g., Aave, Compound). Rewards are generally treated as miscellaneous income when received. If you receive governance tokens as rewards, those are also income at market value on receipt.
Liquidity pool provision
Adding tokens to a Uniswap or Curve pool is more complex:
- Depositing tokens into the pool may constitute a disposal for CGT
- LP tokens received represent your pool share
- Trading fees earned through the pool may be income
- Impermanent loss is not separately deductible — it's baked into the disposal proceeds
- Withdrawing from the pool is another potential disposal
Lending protocols
Lending crypto through Aave or similar platforms and earning interest:
- Interest received is miscellaneous income
- Depositing the underlying asset (e.g., receiving aUSDC for USDC) may or may not be a disposal depending on the terms
- Document whether you retain beneficial ownership throughout
Critical distinction: Income vs capital depends on the specific facts. A blanket rule doesn't work. Document your reasoning for each DeFi activity and apply it consistently.
Step-by-step reporting guide
- Step 1 — Identify all sources: List every protocol, exchange, and wallet where you earned staking or DeFi income during the 2025/26 tax year
- Step 2 — Classify each activity: Determine whether each source generates income (staking rewards, lending interest, farming rewards) or capital events (LP deposits/withdrawals, liquid staking swaps)
- Step 3 — Value at receipt: For income items, record the GBP value at the exact time you received each reward. Use a consistent pricing source
- Step 4 — Calculate cost basis: For capital events, apply Section 104 pooling rules and same-day/30-day matching
- Step 5 — Report income: Declare miscellaneous income on your Self Assessment in the "Other income" section (SA100, box 17) or on the SA106 if applicable
- Step 6 — Report capital gains: Use the Capital Gains Tax pages (SA108) for disposals. Include LP entry/exit and liquid staking swaps
- Step 7 — Cross-reference: Ensure your reported figures align with what exchanges will report to HMRC under CARF
Record-keeping checklist
Common mistakes to avoid
Staking rewards are almost always income. Reporting them as capital gains means wrong tax rate, wrong timing, and a correction notice from HMRC.
ETH → stETH is likely a disposal. Many people assume it's just "the same thing" — HMRC doesn't see it that way.
Even if rewards are automatically restaked, they're still taxable at the point of receipt. Size doesn't matter — all income must be declared.
HMRC requires GBP values. Using USD and converting at year-end is incorrect. Convert at the time of each transaction.
Transaction fees paid in ETH or other tokens can reduce your gains or increase your costs. Track them properly.
Frequently Asked Questions
Is crypto staking income taxed in the UK?
Yes. HMRC treats staking rewards as miscellaneous income, taxable at your marginal income tax rate when received. You'll also owe Capital Gains Tax if you later sell the reward tokens at a profit.
When exactly am I taxed on staking rewards?
At the point the tokens are received in your wallet or become available to you. Not when you sell them. The GBP value at receipt becomes both your taxable income and your CGT cost basis.
Is providing liquidity on Uniswap a taxable event?
Likely yes. Depositing tokens into a liquidity pool and receiving LP tokens in return may be treated as a disposal. The fees you earn through the pool may be additional income. Each entry and exit should be recorded.
Can I offset DeFi losses against my income?
Capital losses from DeFi (e.g., impermanent loss realised on withdrawal) can offset capital gains but not income. Income losses from failed protocols may be claimable in limited circumstances — seek specialist advice.
What if I used multiple chains and protocols?
You need to report income from all chains — Ethereum, Solana, Avalanche, BSC, etc. Use block explorers and DeFi tracking tools to compile a complete record. Missing a chain doesn't reduce your liability.
Do I need to report staking if I earned less than £1,000?
The £1,000 trading allowance may apply to miscellaneous income, but this is a grey area for crypto staking. If your total miscellaneous income exceeds £1,000, you must report it all. Keep records regardless.
Final thoughts
Staking and DeFi income reporting is one of the fastest-evolving areas of UK crypto tax. HMRC's guidance is still catching up with the technology, which means the burden falls on you to classify, document, and report correctly. If you're using multiple protocols across multiple chains, the complexity adds up fast.
Getting it right now — before CARF data starts flowing — is far cheaper than correcting mistakes after HMRC comes knocking.
Need Help Reporting Your Staking & DeFi Income?
KoinKeepers can classify your staking and DeFi activity, calculate your income and capital gains correctly under UK rules, and produce an HMRC-ready filing with full supporting documentation.
General information about UK tax, not advice for your circumstances. Tax rules change; this article reflects our understanding on the date shown above.
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