¿Te preocupa whether interest from lending Bitcoin or other crypto must be declared to HMRC, and how to calculate tax liabilities correctly? This guide sets out concise rules, concrete examples and step‑by‑step reporting instructions for Crypto Lending & Interest Tax in the UK.
Key takeaways appear immediately so the reader can act. Detailed sections follow, including worked numerical examples, Self Assessment entries, CGT interactions, DeFi risk considerations and a practical CSV record template.
Key takeaways: what to know in one minute
- Interest from lending crypto is normally taxable as income when it is received or becomes available; HMRC treats it as miscellaneous income unless a business applies.
- Receiving interest in crypto creates two tax events: income tax on the interest received (valued at receipt) and a potential capital gains event later when the interest tokens or principal are disposed of.
- Loaning Bitcoin can trigger capital gains only in limited circumstances (e.g. a disposal of the principal or if collateral is used and disposed).
- Staking, lending and interest have different tax profiles—staking rewards may be taxed as income or capital depending on context; lending interest is usually income tax.
- Records matter: value at the time of receipt, date, counterparty, transaction IDs and wallet addresses are required to justify calculations to HMRC.
How HMRC treats crypto lending interest income
HMRC guidance classifies crypto receipts by their nature: income tax applies to income (including interest and trading receipts) while capital gains tax (CGT) applies to disposals of cryptoassets. For lending interest, the critical questions are: who receives the interest, in what form, and whether activity amounts to a trade.
When interest is income rather than capital
- If an individual receives interest from lending BTC, ETH or stablecoins on an exchange or lending platform and this is not part of a trading business, the interest is taxed as miscellaneous income (subject to income tax rates and personal allowances).
- If the activity resembles a business (regular lending at scale, invoice-like operations, marketing of lending services), profits could instead be taxable as trading income—different allowances and NICs may apply.
Valuation point for income tax
- Value received is assessed at the time the interest becomes owned and available to the taxpayer. If interest is credited to a wallet, the market value in GBP at that timestamp must be used.
- If interest is paid in the same crypto asset as the principal (e.g. loaned BTC and received BTC interest), each receipt of interest uses the spot GBP value at that receipt moment for income taxation.
Interest paid in kind, tokens or reward tokens
- When interest is paid in governance tokens or platform tokens, the market value of those tokens in GBP at receipt is used to calculate taxable income. Subsequent disposals of those tokens are separate CGT events.
HMRC: Tax on cryptoassets
Reporting crypto loan interest on Self Assessment
Self Assessment reporting requires clarity on where to include crypto lending interest and supporting schedules.
Which boxes to use on SA100/SA102/SA103
- Individuals with non‑trading crypto interest should declare it as other taxable income on the SA100 (the 'other income' box) and include a detailed note or attach a computed schedule with dates, GBP values and calculations.
- If lending is part of a trade, report under self‑employment (SA103) with normal business accounting and allowable expenses.
- For limited companies or LLPs, interest receipts are accounted for as trading or non‑trading income in company accounts and taxed under corporation tax rules.
Completing SA100: practical steps
- Sum all interest receipts in GBP for the tax year (6 April–5 April), using the spot rate at the time each interest amount became available.
- Record the total in the SA100 'Other UK income' or include as part of a self-employment schedule where appropriate.
- Attach a supporting schedule (CSV or PDF) showing transaction-level evidence: date, asset, amount, GBP value, wallet/exchange reference.
Example: reporting interest on SA100
- Interest received: 0.02 BTC on 15 July 2025 when BTC = £30,000. GBP value = £600. Repeat for each receipt across the tax year and aggregate.
- Enter aggregated GBP total under 'Other income' and keep transaction list as evidence.
Capital gains implications when loaning Bitcoin
Loaning Bitcoin does not always create a disposal for CGT. The treatment depends on whether the transaction transfers beneficial ownership.
When loaning is not a disposal
- If Bitcoin is lent but beneficial ownership is expected to be returned in the same asset and the lender retains legal rights (typical custodial lending where ownership technically transfers but equivalent asset returns), HMRC may treat the arrangement as not a disposal for CGT at loan inception. However, risks exist where terms permit substitution or the borrower returns a different asset.
When a disposal occurs
- A disposal may occur if the principal is transferred permanently, collateral is sold, or the loan terms allow substitution of the asset. Any disposal triggers CGT measured from the original acquisition cost to the disposal proceeds (GBP values at those times).
Example: loan principal causing CGT
- Acquired 1 BTC in Jan 2020 at £5,000. Lent 1 BTC in June 2025 and the protocol returned an equivalent token that is not the same legal asset (e.g., a wrapped token treated as a different asset). If that wrapped token is treated as a disposal of the original BTC, CGT arises on the proceed value in GBP at disposal.
Interaction between income and CGT
- Interest received while the asset is on loan is taxed as income at receipt. Later disposal of interest tokens or of the principal (if it becomes a disposal) incurs CGT on gains measured from the value at the time the lender acquired the disposed asset.
Tax differences between staking, lending and interest
Clear distinctions help avoid misreporting.
| Activity |
Typical tax treatment |
Key valuation point |
| Lending (centralised exchange) |
Interest taxed as income; principal usually not a disposal unless sold/converted |
When interest credited |
| Decentralised lending (DeFi) |
Often income tax on rewards; complex CGT triggers may arise on token swaps or liquidity withdrawals |
When reward tokens become available or when liquidity removed |
| Staking |
Taxed as income on receipt except in business contexts; disposal of rewards = CGT later |
When staking rewards credited |
Practical distinctions to apply
- If the arrangement is a straightforward lender–borrower interest payment, treat receipts as income.
- For DeFi positions that involve LP tokens, reward tokens, or automatic reinvestment, break the transaction into: (a) receipt of reward (income), (b) later disposal (CGT), (c) principal events (assess disposals).
DeFi introduces additional uncertainty and audit risk. Important risk areas include beneficial ownership, valuation and enforceability of returns.
Main risks and HMRC concerns
- Substitution risk: Some protocols return different token types—HMRC may treat those as disposals.
- Valuation gaps: Illiquid tokens or forks make GBP valuation hard; HMRC expects best reasonable approach with evidence.
- Counterparty and custodial risk: If control is lost (e.g., smart contract compromise), tax treatment remains based on actual receipts and disposals—the loss may reduce future gains but is not a simple relief.
- Complex token flows: Flash loans, wrapped tokens and automatic swaps require granular record‑keeping.
How to mitigate risk
- Use conservative, evidence‑based valuation (exchange spot where possible) and retain API/exported CSVs.
- Where unclear, obtain written professional advice and keep contemporaneous notes explaining valuation choices.
- Consider treating uncertain protocol receipts as income at receipt and CGT at disposal to avoid underreporting.
Practical record‑keeping for crypto interest and loans
HMRC expects transaction-level evidence. Record retention is essential.
Minimum record list
- Date and time (UTC) of each interest credit or loan event.
- Asset and amount received (e.g. 0.02 BTC).
- GBP value at receipt (quote source and timestamp).
- Wallet address, transaction hash and counterparty/exchange name.
- Loan terms (start, maturity, collateral, substitution rights).
- Receipts of fees, liquidations, or token swaps.
CSV template (example rows)
- date, time, asset, amount, gbp_value_at_receipt, tx_hash, counterparty, notes
- 2025-07-15, 10:32:14, BTC, 0.02, 600.00, 0xabc..., LendEx, Interest credited
Practical checklist before filing
- Reconcile exchange statements with wallet transaction history.
- Convert every non‑GBP transaction using the timestamp spot rate and document the source.
- Keep a reconciled summary for each tax year with totals for income and disposals.
Crypto lending: simple flow to tax compliance
🔁 Step 1 → Loan crypto to platform (note terms)
💳 Step 2 → Receive interest credited (record timestamp + GBP value)
🧾 Step 3 → Report interest as income on SA100 or trading return
⚖️ Step 4 → If later disposal occurs, calculate CGT from acquisition cost to disposal proceeds
✅ Result → Maintain CSV evidence and keep detailed notes for HMRC enquiries
Analysis: advantages, risks and common errors
✅ Benefits / when to apply
- Lending can produce yield on otherwise idle crypto and is usually taxed as income rather than immediately triggering CGT.
- For individuals within the Personal Allowance, small amounts of interest may be tax‑free in practice.
⚠️ Errors to avoid / risks
- Failing to value interest at the correct GBP spot price at receipt.
- Omitting to declare interest received in token form or using exchange balances as sole evidence without transaction hashes.
- Assuming lending never creates disposals—terms permitting substitution or wrapped returns can create CGT events.
Frequently asked questions
What rate is applied to crypto lending interest?
Interest is taxed at the individual's marginal income tax rate (20%, 40% or 45%) after personal allowances, unless the activity is a trade requiring different treatment.
Does borrowing crypto create a taxable event?
Borrowing itself is not usually taxable for the borrower; tax events arise for the lender when interest is received and for either party on disposals or sales of assets.
If interest is paid in a stablecoin, how should it be reported?
Stablecoin interest must be valued in GBP at the time of receipt and reported as income. The stablecoin's GBP value is the taxable receipt.
How are liquidations or margin calls taxed?
Liquidations that result in the disposal of collateral will trigger CGT measured from the original acquisition cost of the disposed asset; losses may be used to offset gains where evidenced.
Is there a de minimis for crypto interest?
No specific HMRC de minimis exists for crypto interest; however, very small amounts still count as taxable income and should be recorded. Practical materiality applies for enforcement but not for legal compliance.
How long should records be kept?
Records should be kept for at least six years in most cases (HMRC standard) and longer if related to unresolved enquiries.
- Export and save a transaction‑level CSV for the last tax year showing dates, amounts, GBP values and tx hashes.
- Reconcile interest receipts with GBP spot values (note sources) and compute the total taxable income for the year.
- If uncertain about a protocol's treatment (DeFi, wrapped tokens), obtain a short professional opinion and file with a clear explanatory schedule to HMRC.