Received free tokens? Whether it’s a reward for using a protocol or a random drop into your wallet, you need to know how HMRC treats airdrops, and when they trigger a tax bill.

We’re solely covering airdrops in this article but head to our UK Crypto Tax Guide for a broader understanding. 

How are crypto airdrops taxed?

It depends on why you received the airdrop. There are two possible tax events: Income Tax when you receive it, and Capital Gains Tax when you eventually sell or swap it.

Do you owe Income Tax on airdrops?

It comes down to one question: did you do anything to earn it?

Yes, Income Tax applies if the airdrop was received in return for a service. For example, testing a product, completing tasks, promoting a token, or providing development work. The pound value at the date of receipt should be reported as miscellaneous income on your SA100. Curious about how much Income Tax you'll pay? Check out our free Income Tax calculator.

No, Income Tax if the tokens landed in your wallet unsolicited, without you doing anything to qualify. Those random airdrops you never asked for? No Income Tax to worry about.

If the airdrop is part of a crypto trade or business, it should be reported as trading income, and National Insurance will also apply.

Income Tax rates

Worked example: Rachel receives a Solana airdrop

Rachel participates in a Solana-based project by completing tasks. She receives 50 SOL tokens, worth £5,000 at the date of receipt (£100 per SOL).

Because the airdrop was received in return for a service, it’s taxable income.

Rachel reports £5,000 as miscellaneous income on her SA100.

Six months later, she sells 25 SOL for £3,750 (£150 per SOL).

Cost basis: 25 × £100 = £2,500.
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Capital gain: £1,250.
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Try the disposal in Recap’s calculator.

Capital Gains Tax on airdropped crypto

Whenever you sell, swap, spend, or gift airdropped tokens, you’ll pay CGT on the change in value since you received them, regardless of whether Income Tax applied at receipt. You can get more information in our full guide covering the taxes applying to crypto airdrops. 

For taxable airdrops: your cost basis is straightforward. It’s the pound value at the date of receipt (the same amount you reported as income).

For non-taxable airdrops: the cost basis is less certain. It could be argued as nil or as the fair market value at receipt. This is a grey area, and we’d recommend speaking to a tax professional about your specific situation.

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%.

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.

FAQs

Are all crypto airdrops taxable?

No. Only airdrops received in return for a service or as part of a trade/business are subject to Income Tax. Random, unsolicited airdrops aren’t income-taxable, but CGT still applies when you dispose of them.

What if I received an airdrop I didn’t ask for?

If you received tokens without doing anything to qualify, there’s no Income Tax to pay. You’ll still owe CGT when you eventually sell or swap them.

How do I value an airdrop for tax purposes?

Use the pound value on the date of receipt. This becomes both your taxable income amount and your cost basis for future CGT.

How to calculate your Crypto taxes

Calculating crypto taxes can be complicated and time consuming for investors with lots of transactions. That’s where our crypto tax calculator partner Recap can help. Simply connect your accounts and wallets and they find valuations and apply tax calculations to all of your transactions, leaving you with a report 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.

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