How to Report Staking Rewards to HMRC (Lido, Rocket Pool, Aave)

You staked ETH on Lido. Or deposited into Rocket Pool. Or supplied tokens to Aave. Rewards have been accumulating. Now you need to file a tax return, and the question is: how exactly does HMRC tax this?

The answer depends on the protocol, the type of token you received, and whether the rewards accrue via rebasing, exchange-rate appreciation, or interest-like payments. Get it wrong and you'll either overpay (treating income as capital gains) or underpay (missing income events entirely).

This guide covers the HMRC rules for staking income, how each major protocol works from a tax perspective, which boxes on your Self Assessment it goes in, and how to avoid the double taxation trap.

The basic rule: staking rewards are income

HMRC's position is straightforward. Their Cryptoassets Manual (CRYPTO21200) states that staking rewards received by individuals who are not trading are taxable as miscellaneous income at the fair market value (FMV) in GBP at the moment you receive them.

This is charged under section 688 of ITTOIA 2005 (Income Tax (Trading and Other Income) Act). Staking returns are not treated as interest — because HMRC does not consider cryptoassets to be money or currency (CRYPTO10100). That means the Personal Savings Allowance (up to £1,000 for basic rate taxpayers) does not apply.

Staking income is added to your total taxable income for the year. If your salary already puts you in the higher rate band, your staking rewards will be taxed at 40% or 45%.

The £1,000 miscellaneous income allowance

There is a £1,000 tax-free allowance for miscellaneous income under section 783AA of ITTOIA 2005. If your total miscellaneous income from all sources (staking, airdrops, mining, and any other miscellaneous income) is below £1,000 in the tax year, it is tax-free and you do not need to report it.

Two important caveats:

• It is a shared allowance across all miscellaneous income — not per source. If you receive £800 in staking rewards and £300 in airdrops, you've exceeded it.
• You cannot use the £1,000 allowance and deduct expenses. It is one or the other. If your expenses (gas fees for claiming rewards, for example) exceed £1,000, deducting expenses is more beneficial.

For most active DeFi stakers, the £1,000 threshold is exceeded quickly. At current ETH staking APR (~3–4%) on 32 ETH, annual rewards would be roughly £2,000–3,000 — well above the allowance.

How each protocol works — and the tax implications

The tax treatment depends on the mechanism the protocol uses to distribute rewards. There are two fundamentally different models, and they have very different record-keeping requirements.

Lido: stETH (rebase model)

When you deposit ETH into Lido, you receive stETH at approximately 1:1. Staking rewards accrue by increasing your stETH balance daily. Hold 10.000 stETH today, hold 10.008 stETH tomorrow.

Tax treatment:

1. Deposit (ETH → stETH): Likely a disposal for CGT purposes. You are transferring ETH and receiving a different token. HMRC's DeFi guidance (CRYPTO61600 series) indicates that receiving different tokens back from a protocol is an exchange of assets. In practice, because stETH trades close to 1:1 with ETH, the gain or loss on deposit is typically negligible.
2. Daily rebases: Each rebase that increases your stETH balance is an income event — taxable as miscellaneous income at the GBP value of the additional stETH received. This can mean up to 365 separate income events per year.
3. Withdrawal (stETH → ETH): A disposal for CGT. Cost basis includes the original acquisition plus every rebase income event at FMV.

Rocket Pool: rETH (exchange-rate model)

When you deposit ETH into Rocket Pool, you receive rETH. Your rETH balance stays fixed — but the rETH:ETH exchange rate increases over time as rewards accumulate in the protocol.

Tax treatment:

1. Deposit (ETH → rETH): Likely a disposal, but because the rETH value at deposit equals the ETH value, there should be no gain or loss.
2. No periodic income events: Unlike stETH, your rETH balance does not change. There are no rebases triggering daily income events. The value appreciation is embedded in the exchange rate.
3. Withdrawal (rETH → ETH): You receive more ETH than you deposited. The excess represents accumulated staking rewards. HMRC's analysis (per the DeFi consultation and CRYPTO61650) suggests the user should separate the return into two components: the initial capital (not income) and the reward portion (miscellaneous income). The remaining gain is then subject to CGT.

Coinbase: cbETH (exchange-rate model)

cbETH works like rETH — it is an exchange-rate model where the cbETH:ETH ratio increases over time. The tax treatment is analogous. The difference is that minting happens through Coinbase (centralised), not a smart contract. When you burn cbETH for ETH, the excess ETH over your original deposit represents accumulated rewards.

Rebase vs exchange-rate: tax comparison

Aave: lending, not staking — but still taxable

Aave is technically a lending protocol, not a staking protocol. When you supply tokens to Aave, you receive aTokens (e.g. aETH, aUSDC) that represent your deposit plus accrued interest.

HMRC's DeFi guidance (CRYPTO61110–CRYPTO61650) covers this explicitly. The key points:

• Supply (deposit): May be a disposal if beneficial ownership transfers to the protocol. CRYPTO61640 states that if the platform can "freely use" the deposited tokens, this indicates a transfer of beneficial ownership. In practice, Aave deposits are commonly treated as lending rather than a disposal — but the line is blurry.
• Interest earned: HMRC is explicit that DeFi returns are not interest for tax purposes (CRYPTO61110), because crypto is not money. The returns are either miscellaneous income (if revenue-nature) or capital (if one-off). For recurring Aave interest, income treatment applies.
• Withdrawal: If supply was treated as a disposal, withdrawal is a reacquisition. Otherwise, it is a return of your property with income on the excess.

Exchange staking: Coinbase, Kraken, and others

Staking through a centralised exchange (Coinbase Earn, Kraken staking, etc.) follows the same principles. HMRC's CRYPTO21200 makes no distinction between exchange staking and self-custody staking.

Rewards credited to your exchange account are miscellaneous income at FMV on the credit date. The exchange typically provides clear statements of rewards received, making record-keeping simpler than on-chain staking.

One additional consideration: from 1 January 2026, UK crypto platforms are reporting user transaction data to HMRC under CARF. Your exchange will tell HMRC exactly how much you received in staking rewards. Make sure your return matches.

Validator staking: running your own node

If you run an Ethereum validator (32 ETH stake), the tax analysis has some unique elements:

Is the 32 ETH deposit a disposal?

HMRC has not explicitly addressed this. The better argument (and the position most UK tax professionals take) is that it is not a disposal. You retain beneficial ownership — the ETH is deposited to the Beacon Chain deposit contract using your own withdrawal credentials. Since the Shapella upgrade (April 2023), both partial and full withdrawals are available, strengthening the ownership argument.

Reward types

• Consensus layer rewards (attestation, block proposals): Accumulate on the Beacon Chain. Taxable as miscellaneous income when received via partial withdrawal.
• Execution layer rewards (priority fees, MEV): Sent directly to your fee recipient address on every proposed block. Taxable as miscellaneous income on receipt.

Full validator exit

When you exit your validator and withdraw everything, the 32 ETH principal is a capital return (no income tax). Any excess above 32 ETH represents accumulated rewards — that's miscellaneous income at FMV. If you then sell the ETH, CGT applies on any gain over your cost basis.

Which boxes on your Self Assessment?

Staking income and the capital gains from disposing of staked tokens go in different places on your tax return:

SA100 (main return) — staking income

Staking rewards are reported in the "Other UK income not included on supplementary pages" section:

• Box 17: Total other taxable income — your aggregate GBP value of all staking rewards in the year
• Box 18: Allowable expenses (e.g. gas fees for claiming rewards, if not using the £1,000 allowance)
• Box 21: Description — e.g. "Cryptocurrency staking rewards"

SA108 (capital gains) — disposal of staked tokens

When you sell, swap, or otherwise dispose of tokens you received as staking rewards, the gain goes on SA108. For 2024/25, use the new cryptoassets section (boxes 13.1–13.8). The cost basis for CGT is the FMV at which you already paid income tax — so you're only taxed on appreciation after receipt.

The double taxation trap — and how to avoid it

Staking rewards are taxed twice: once as income on receipt, then as capital gains when you dispose of them. HMRC prevents true double taxation by letting the FMV at receipt become your CGT cost basis — so you only pay CGT on appreciation after the income event.

Example

The "dry tax" problem

The risk is when the price drops after you receive rewards:

1. Receive 1 ETH at £2,000 FMV — pay £800 income tax
2. ETH drops to £1,000 — you sell
3. CGT: (£1,000 − £2,000) = −£1,000 capital loss
4. You paid £800 income tax on value you never realised. The £1,000 capital loss can offset other capital gains — but cannot offset income tax. These are separate tax pools.

Mitigation: If you want to lock in the income value and avoid ongoing price risk, sell staking rewards promptly after receipt. The CGT on immediate sale will be negligible (near-zero gain), and you'll have GBP to cover the income tax bill.

The NGNL regime: what's coming

HMRC's proposed No Gain / No Loss (NGNL) regime for DeFi would change how deposits and withdrawals are taxed. Under NGNL, moving tokens into a staking or lending protocol would not trigger a CGT disposal — the tax event is deferred until you actually sell for fiat or exchange for a different asset.

The government confirmed its intent in the Autumn Budget 2025 consultation response, but NGNL has not yet been legislated. It remains at the consultation stage and would apply prospectively (not retroactively) once enacted. The earliest possible commencement is April 2026, but this is not confirmed.

Step-by-step: reporting staking rewards for 2024/25

1. Total up your staking income. For rebase tokens (stETH): sum the GBP value of every daily rebase. For exchange-rate tokens (rETH, cbETH): calculate the reward portion on withdrawal. For exchange staking: use your exchange statements.
2. Check the £1,000 allowance. If your total miscellaneous income (all staking + airdrops + mining) is below £1,000, it is tax-free. Above £1,000, report the full amount on SA100 Box 17.
3. Report income on SA100. Aggregate GBP value in Box 17, expenses in Box 18, description in Box 21.
4. Track cost basis for CGT. Every income event becomes an acquisition in your Section 104 pool at the GBP FMV on the date of receipt. This is your cost basis when you later dispose of the tokens.
5. Report disposals on SA108. When you sell or swap staked tokens, report in the new cryptoassets section (boxes 13.1–13.8). Remember the 2024/25 split-year CGT rates: 10%/20% before 30 October, 18%/24% on or after. See our complete 2024/25 guide →
6. Keep records. HMRC can ask to see how you arrived at every number. You need: dates and GBP values of all reward receipts, S104 pool calculations, and the matching rule (same-day, B&B, or S104) used for each disposal.