Mining crypto in the UK? Whether it’s a side hobby or a full-time operation, HMRC wants to know about it. Here’s how mining is taxed, and what you can claim back.

Income Tax on mining rewards

Crypto you earn from mining counts as taxable income. For most people, mining rewards are taxed as ‘miscellaneous income’ based on the pound value of the crypto when you receive it.

Income tax rates

Those earning over £125,140 don’t receive a tax-free personal allowance.

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Worked example: Tom mines Bitcoin

Tom mines 0.01 BTC per month throughout the 2024/25 tax year. At each receipt, BTC is worth approximately £50,000, giving him £500/month in mining income.

Total annual mining income: £6,000.

After the £1,000 trading allowance, £5,000 is taxable at his marginal income tax rate.

Tom later sells 0.06 BTC when BTC is at £75,000. Proceeds: £4,500. Cost basis: 0.06 × £50,000 = £3,000.

Capital gain: £1,500.

Try the disposal in Recap’s calculator.

Capital Gains Tax on mined crypto

When you eventually sell, trade, spend, or gift crypto you’ve mined, you’ll pay CGT on the change in value since you received it. Your cost basis is the pound value of the crypto at the time of the mining reward.

CGT rates

*2024/25 is a split year: disposals before 30 October 2024 are taxed at 10%/20%; disposals on or after 30 October 2024 are taxed at 18%/24%.

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What expenses can you deduct?

When mining is taxed as miscellaneous income, you can deduct appropriate expenses like electricity costs. If your mining amounts to trading income (rare), you may also be able to deduct hardware costs. It’s worth checking with a tax advisor, as HMRC don’t specifically cover this in their guidance.

There’s a £1,000 trading allowance for miscellaneous and trading income. If your total is above £1,000, you can deduct the £1,000 flat allowance instead of itemising actual expenses, whichever works out better for you.

One important catch: mining costs are not deductible for CGT purposes, only for Income Tax.

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CARF: your exchange is now reporting to HMRC

From January 2026, UK exchanges are required to report your transaction data directly to HMRC. Every trade, transfer, and deposit will be visible.

55–95% of UK crypto holders are estimated to be non-compliant. The window for easy voluntary disclosure is closing. Use Recap and speak to a Crunch accountant to get ahead.

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FAQs

Is crypto mining income taxable in the UK?

Yes. Mining rewards are taxable income, reported as miscellaneous income based on their pound value when you receive them.

Can I deduct electricity costs?

Yes, where mining is taxed as miscellaneous income. Alternatively, you can use the £1,000 trading allowance instead of itemising expenses.

Do I pay tax twice with Income Tax and CGT?

Potentially, yes. Income Tax applies when you receive the mining reward. CGT applies later if you dispose of the crypto and its value has changed.
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Support with crypto tax

Keeping track of your mining income and calculating the tax due on your crypto mining activity can become complex. Fortunately, our crypto tax partner Recap can help. Once you have connected your accounts, their software calculates your income tax and capital gains and generates a crypto tax report for you, ready to share with your Crunch accountant. 

The information provided in this article is for general informational purposes only and should not be construed as financial or tax advice. We recommend consulting with a qualified tax advisor or financial professional who can provide personalised advice tailored to your specific circumstances.