Staking Income Tax UK

Koinly Support
#1

Hi Sir/Madam,

I am a UK resident and I have been receiving staking rewards for my ADA holdings for this tax year 2024/2025. I understand this is classed under miscellaneous income under HMRC and we have a £1000 allowance for this. I am almost reaching the £1000 threshold in a few epochs and I am considering selling the staking rewards above £1000. I am concerned how this is treated in Koinly.

  • Say I receive 50 ada and the value is £50 and my total misc income for this tax year is now £1050, so I have to pay tax on the £50. Upon receiving my 50 ADA reward, I want to send this 50 amount to Coinbase where I will sell to GBP. I understand there is a possible capital gain/loss from the time i send my staked reward from my wallet to coinbase (as the price fluctuates), but how will this show up on my Koinly transactions? I.e how will Koinly know this sell is from my staked reward and not part of my usual holding of ADA? I don’t want Koinly to treat the sale of this staked reward as part of usual ADA holding where this is subject to average cost basis because that wouldn’t be correct.

Thanks,

#2

Hi @ACE

  1. Staking Rewards as Income

When you receive ADA staking rewards, they are categorized as miscellaneous income by default in Koinly as long as they are tagged as “reward”. The value of the rewards at the time of receipt is recorded as income. For example:
• 50 ADA received = £50 (at the time of receipt)
• This is added to your income total for the tax year.

There is also a toggle to change this in the settings. Check Settings > Treat rewards/airdrops/mining as income

  1. Distinguishing Staked Rewards from Other ADA Holdings

Koinly uses a cost basis method depending on your settings and country rules. In the UK, all holdings of the same token (ADA in this case) are pooled under a single cost basis. This means:
• Staked rewards are added to your ADA pool.
• If you sell ADA, Koinly will calculate gains/losses based on the average cost basis of the pool.

Unfortunately, Koinly does not distinguish between ADA from staking rewards and ADA from regular holdings for capital gains purposes because HMRC requires all tokens of the same type to be pooled together.

Check out https://koinly.io/blog/calculating-crypto-taxes-uk-share-pooling/

#3

Thanks. After a bit of research, I found Koinly adds the market value of the staked rewards (when received) to the overall cost basis of my ADA holdings therefore this avoids the double tax issue.

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