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HMRC treats Bitcoin mining as a trading activity — meaning mined BTC is taxed as income when received, not as capital gains. This guide explains the rules, deductions, and how to stay compliant.
HMRC's View on Mining
Mining = Trading activity (usually). Bitcoin is taxed as income at the GBP value when mined.
Hobby vs Trading
| Factor | Hobby Miner | Trading Miner |
|---|---|---|
| Setup | 1–2 miners, casual | Multiple miners, organised |
| Income source | Not main income | Significant income |
| Tax | Income tax, limited deductions | Income tax, full deductions allowed |
Tax Treatment
- Income Tax: GBP value of BTC when mined (20–45% rate)
- Deductions: Electricity (mining portion), equipment depreciation, pool fees
- On Sale: Capital Gains Tax when you sell the mined BTC (separate event)
Worked Example
Mined £30,000 of BTC during the year:
- Electricity costs: £8,000
- Equipment depreciation: £5,000
- Taxable profit: £17,000
- Income tax at 40%: £6,800
Pro Tip: Use crypto tax software like Koinly to automatically track your mining income and generate HMRC-compliant reports.
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