# Ethereum explained for UK holders

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.

## Key facts
- ETH is the native token of the Ethereum network.
- Staking rewards may be subject to Income Tax — check HMRC guidance for your situation.
- Swapping ETH for tokens or NFTs is a CGT disposal.
- Smart contracts on Ethereum enable DeFi — additional tax complexity may arise.

## 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.

## FAQs
### 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.

## Sources

- [HMRC — Check if you need to pay tax when you receive cryptoassets](https://www.gov.uk/guidance/check-if-you-need-to-pay-tax-when-you-receive-cryptoassets)
- [HMRC — Cryptoassets Manual](https://www.gov.uk/hmrc-internal-manuals/cryptoassets-manual)

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— Digital Assets UK (https://digital-assets.co.uk/assets/ethereum/), reviewed 2026-06-23. Source: https://www.gov.uk/guidance/check-if-you-need-to-pay-tax-when-you-receive-cryptoassets