Play to earn gaming rewards - how are nft rewards and crypto rewards taxed UK

Tax Questions
#1

Hi

In terms of play to earn games. How are rewards taxed in the UK?

What are NFT rewards taxed as? Capital gains or income

What are Crypto rewards taxed as? Capital gains or income

Any help would be great

#2

Hi @Adam3, Below is excerpt from Koinly’s UK Crypto Guide 2023 which is an excellent resource. https://koinly.io/guides/hmrc-cryptocurrency-tax-guide/

Hope this helps.

"HMRC hasn’t yet released guidance on engage-to-earn or play-to-earn platforms which appeared primarily in the DeFi space recently. However, as earning crypto through staking and mining is considered income, we can infer that earning tokens and coins through these platforms would also likely be considered income by HMRC. Examples of potential crypto income include:

  • Referral rewards like Binance Referral.
  • Learn to earn campaigns, like Coinbase Learning Center or CoinMarketCap Learning Center.
  • Watch to earn platforms like Odysee.
  • Browse to earn platforms like Brave.
  • Play to earn games like Axie Infinity.
  • Shop to earn through browser extensions like Lolli.

In summary - any time you’re earning new tokens as a result of an investment activity, this is likely to be seen as Income and subject to Income Tax. You can learn more in our UK DeFi Tax guide."

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#3

Hi there,

So its agreed that xToEarn is classed as income, are we able to count any cost to ‘repair’ said NFT to keep it functioning as an expense? This is in the context of an individual

Thanks

#4

Hi @Adam3 @CryptoNobody

As @Mark_DesLauriers mentioned, our UK Crypto Guide covers this area but if you need further guidance, I suggest you talk to a crypto-aware tax accountant since here at Koinly we cannot give you tax advice as it is beyond our scope of support.

Thanks @Mark_DesLauriers

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