Last updated on 7 August 2026
NFT Taxation in the UK: Minting, Bridging, and Lending
NNFT taxation in the UK depends on what you do with your NFTs, minting, selling, lending, or breaking them into fractions can each have different tax consequences.
Many people ask if NFTs are taxed in the UK. The answer is yes. HMRC treats NFTs as assets, just like cryptocurrency. That means actions like selling, swapping, or gifting NFTs can trigger capital gains tax (CGT). Some activities, like minting or receiving NFTs for work, might lead to income tax instead.
Minting NFTs: Is It a Taxable Event?
If you create an NFT (also called minting), HMRC generally does not treat that as a taxable event. You’re just creating a digital item. There’s no sale or disposal yet. So there’s no capital gains tax (CGT) or income tax at the point of minting. We have covered the 2025 NFT tax outlook in more detail here, including royalties, airdrops, and gaming NFTs.
But once you sell or transfer that NFT, then you could owe tax. If you’re an artist or creator and you sell the NFT, the income could be taxed as trading income. If you’re not trading, it may fall under capital gains.
Sarah is a digital artist. She mints 10 NFTs and sells 3 for 2 ETH each. HMRC may see this as income from self-employment. Sarah will need to report that income and possibly pay income tax and National Insurance.
Fractional NFTs: What Happens When You Break One NFT Into Many?
Fractional NFTs are when you split one NFT into many parts, letting more people own a share. This can be done using smart contracts. But here’s the issue: HMRC may see this as a disposal of the original asset.
In tax terms, that means you’ve “got rid” of one asset and created new ones. This can trigger a capital gains tax event. The new fractional NFTs may be treated as different assets with a new base cost.
NFT Lending: Income and Foreclosure Risks
NFTs can be used as collateral for loans. You can also lend out your NFTs to earn interest or rewards. But both lending and borrowing come with tax questions.
If you lend an NFT and earn a fee, that fee is likely taxable. It could fall under income tax if it’s regular activity.
If your NFT is used as collateral and gets liquidated or foreclosed, that’s usually a disposal. So it could trigger CGT.
Jane uses her NFT to borrow crypto. She fails to repay, and the platform sells her NFT. Even though she didn’t sell it herself, it’s a disposal. Jane will owe CGT on any gain from when she acquired the NFT to when it was foreclosed.
Bridging NFTs Between Blockchains
Bridging is when you move an NFT from one blockchain to another, like Ethereum to Polygon. Often, the original NFT is locked, and a new one is created.
HMRC hasn’t issued clear rules on this. But many tax advisors say bridging may count as a disposal of the original NFT and an acquisition of the new one. That means potential CGT on the “sale” of the original NFT, even though you still own it. This is similar to how HMRC may treat crypto bridging, where locking assets and issuing wrapped tokens across chains could be considered a taxable disposal.
Ali bridges his NFT from Ethereum to Solana. The Ethereum version is locked, and a wrapped version is created on Solana. HMRC could say the Ethereum NFT was disposed of. If it had gone up in value, that’s a capital gain.
Capital Gains Tax on NFTs
NFTs are digital assets. If you sell one for more than you bought it, that’s a capital gain. The gain is taxed based on your income bracket:
- Basic rate (up to £50,270): 10% CGT
- Higher/additional rate: 20% CGT
You can earn up to £3,000 in gains tax-free each year (as of 2025).
You buy an NFT for £500. Later, you sell it for £1,500. Your gain is £1,000. If this is your only gain that year and below the allowance, there’s no tax. But if you had other gains, CGT might apply.
Income Tax on NFTs
Some NFT activities may fall under income tax instead of CGT. These include:
- Getting NFTs as payment for services
- Earning rewards or royalties from NFTs
- Receiving airdropped NFTs (if done in return for something)
Income is taxed at your standard income tax rates (20%, 40%, 45%).
Tax Reporting for NFTs
You must include NFT gains or income in your Self Assessment tax return. HMRC expects you to keep records of:
- Date and cost of acquiring the NFT
- Date and price when you sell or dispose of it
- Gas fees and transaction costs
There are tools like CoinTracking and Recap that help track NFT and crypto activity for tax purposes.
With new crypto reporting rules arriving by January 2026, it’s more important than ever to stay compliant and transparent with your NFT and crypto activity.
Need Help with NFT Taxation?
If you are minting NFTs, earning royalties, using them as collateral, or investing in fractional NFTs, it’s important to understand your tax obligations.
At Crypto Accountants, we provide NFT accounting and tax services for creators, collectors, and DeFi users. Book your consultation today at Crypto Accountants.
Frequently Asked Questions
Are NFTs taxed in the UK?
Yes. NFTs are treated as assets by HMRC. Depending on the activity, they can be subject to either capital gains tax or income tax.
Is minting an NFT a taxable event?
Not on its own. Creating (minting) an NFT isn’t usually taxed. But if you sell the NFT or earn money from it, that may trigger tax.
What if I get paid in NFTs?
If you receive NFTs as payment for services or work, it’s treated as income. You’ll need to report the value and pay income tax on it.
Do I have to pay tax on NFT airdrops?
Yes, if the airdrop is received in exchange for something, like joining a platform or promoting a project. If the airdrop is completely unsolicited, it may only become taxable when you sell the NFT.
Do I need to report NFTs on my tax return?
Yes. You should report both income and gains from NFTs in your Self Assessment. Make sure you keep records of purchase prices, sale prices, and any fees paid. .
