NFT Tax UK: How HMRC Taxes Non-Fungible Tokens

HMRC classes NFTs as cryptoassets, so the tax framework that applies to Bitcoin and Ethereum applies here too, with some twists specific to how NFTs are created and traded.

Minting an NFT is not a taxable event. You are creating an asset, not disposing of one, so no tax falls due at that point. The gas fees you pay to mint can be added to your cost basis, which reduces the gain when you eventually sell.

Selling an NFT you created is taxed as either income or capital gains. If you are producing NFTs commercially, HMRC is likely to treat the proceeds as trading income, taxed through Self Assessment at your marginal income tax rate. If it is a one-off or clearly an investment activity, Capital Gains Tax applies instead. HMRC looks at how often you sell, how organised the activity is, and what your intent was.

Buying and reselling NFTs follows standard CGT rules. Your gain is the sale price minus what you paid plus allowable costs (gas fees, marketplace fees). Losses on NFT sales can be offset against gains elsewhere.

Royalties from secondary sales are taxed as income, either trading income or miscellaneous income depending on your level of activity.

The figure most people get wrong is the cost basis. Every disposal needs one, and if you have bought the same NFT collection multiple times, the share pooling rules apply just as they do with fungible crypto. HMRC expects you to hold records that substantiate every figure you report.