The short version: Crypto mining is how new cryptocurrency gets created. Miners use powerful computers to solve complex puzzles. When they succeed, they’re rewarded with newly created coins.
How does it work?
Mining involves verifying transactions on the blockchain. Your computer races against others to solve mathematical problems. If yours wins, you get paid in crypto. But the odds are low and the electricity costs are high.
What’s the tax position?
If you mine crypto, HMRC treats it as self employment income. You pay Income Tax and National Insurance on the value of the coins you receive (calculated in pounds at the time you receive them).
You can claim expenses against this income, things like the cost of your mining equipment, electricity, and any other genuine business costs. But only if mining is a proper business activity, not just a hobby.
What about selling what you’ve mined?
If you later sell the crypto for more than it was worth when you received it, you might also owe Capital Gains Tax on the increase in value.
Mining crypto and want to make sure you’re reporting it properly? Talk to us and we’ll help you get it right.
