Ethereum explained for UK holders
Quick answer: Ether is an exchange token under HMRC rules. Disposals may trigger CGT; staking rewards may be taxable as income depending on circumstances. Use FCA-registered platforms and keep detailed records.
Ethereum is a blockchain platform; its native token ether (ETH) is used to pay transaction fees and participate in network security through staking.
Ethereum vs bitcoin
Bitcoin primarily functions as a digital token. Ethereum additionally supports programmable smart contracts — self-executing code on the blockchain. Many other tokens are issued on Ethereum.
Staking and tax
When you stake ETH, rewards may be treated as taxable income when received, depending on whether your activity amounts to a trade. HMRC's Cryptoassets Manual covers mining and staking in more detail.
DeFi interactions
Using decentralised finance protocols — lending, liquidity pools, swaps — can create multiple disposals and income events. Keep transaction-level records; exchange CSVs may not capture on-chain activity.
Frequently asked questions
Do I pay tax when I stake ETH?+
Rewards may be taxable as income when received. Subsequent disposal of those tokens can also trigger CGT on any gain.