Last updated: 14 October 2026
Is VAT charged on Bitcoin mining?
No. HMRC treats income received from Bitcoin and other cryptoasset mining as outside the scope of VAT, because there is no identifiable customer or direct link between the service and the reward. Exchanging Bitcoin for pounds or other currencies is exempt from VAT, following the European Court’s Hedqvist decision, which HMRC applies. But goods or services you sell in exchange for Bitcoin are subject to VAT in the normal way, valued in sterling at the time of the sale.
HMRC’s VAT position on cryptoassets
| Activity | VAT treatment |
| Mining rewards (proof of work) | Outside the scope |
| Staking rewards | Generally outside the scope; check HMRC’s current guidance |
| Exchanging crypto for fiat currency | Exempt |
| Charging a fee or commission on exchanges | Exempt financial service, in most cases |
| Selling goods or services paid in crypto | Normal VAT rules apply |
| Mining-as-a-service or hosting for third parties | Standard-rated, as a taxable service |
HMRC’s position was first set out in Revenue and Customs Brief 9 (2014) and is now in its Cryptoassets Manual.
Reclaiming VAT on mining equipment
Because mining income is outside the scope, a business that only mines can’t reclaim VAT on its mining rigs, electricity or cooling costs. If you also make taxable supplies, such as hosting services, you must apportion input tax between taxable and non-business activity.
Direct tax still applies
VAT is only part of the picture. Mining can be a trade, taxed as income, or a hobby, with the cryptoassets acquired taxed under CGT when sold. HMRC looks at the degree of activity, organisation, risk and commerciality.
| Factor | Points towards trading |
| Large-scale, organised operation | Yes |
| Significant investment in equipment | Yes |
| Mining as part of a pool on a small home computer | Less likely |
If you are trading, profits are taxed as income and the value of coins at the time you receive them is income. If not, the coins’ value when received is usually miscellaneous income, and later gains are subject to CGT.
Example
A company sets up a mining operation costing £120,000 in equipment, with £8,000 VAT on electricity. It earns rewards worth £60,000 in a year. No VAT is charged on the rewards, and the company can’t reclaim the VAT on its costs. For corporation tax, the rewards are trading income and the equipment qualifies for capital allowances.
Accepting crypto as payment
If you sell a laptop for 0.02 BTC, the VAT is calculated on the sterling value of 0.02 BTC at the time of the sale. Keep records of the exchange rate you used.
Records to keep
- Wallet addresses and transaction histories
- Exchange rates at receipt and disposal
- Electricity bills and equipment invoices
- How you’ve apportioned costs
Mining pools
If you mine through a pool, record the value of each payout on the day you receive it, using the exchange rate from a reliable source.
Frequently asked questions
Do I need to register for VAT as a miner?
Not for mining income alone, because it’s outside the scope.
Is selling NFTs subject to VAT?
It can be. HMRC’s guidance on NFTs is still developing.
Are crypto exchange fees exempt?
Generally yes, as financial services.
Do I pay CGT when I sell mined coins?
Usually, unless you are trading.
Related: zero-rated vs exempt supplies and corporation tax rates.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with VAT and cryptoassets. See our VAT accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
