Income or Interest UK

How are the wider UK community declaring their gains from something like Blockfi?

In my view - as the account is actually described as an ‘Interest account’ I believe it should be treated as such? Much like a saving bank account. Therefore gains up to £1000 for basic and £500 for higher earners are free of tax and the rest is taxed at income tax rate?

Even in the Koinly UK tax guide it’s a grey area:

Tax on staking / lending

This is a grey area since there is no guidance from the HMRC on how to report these.

However, the conservative approach is to declare this in the same way as Mining i.e. pay Income tax on any staking/lending income at your regular income tax rate. If you received the income in a cryptocurrency then you can calculate the fair market value of the coins at the time you received them.

Note that some may want to treat this as savings income instead, the main benefit of this would be that you can claim your personal savings allowance to reduce the taxes further. However, we recommend checking with a tax accountant before doing this.