Airdrop Tax UK: How HMRC Taxes Free Crypto Tokens

Airdrops — free tokens distributed to wallet addresses — are taxable events in the UK. The tax treatment depends on the type of airdrop.

Types of Airdrops

Type	How It Works
Token distribution	Free tokens sent to existing holders
Forced airdrop	Tokens appear in your wallet without action
Claim-based airdrop	You must claim the tokens
Task-based airdrop	Complete tasks to earn tokens
Holder airdrop	Based on holding a specific asset

Tax Treatment by Type

Airdrop Type	Tax Treatment
Token distribution (no action needed)	No tax until you sell
Claim-based airdrop	Income tax at market value when claimed
Task-based airdrop	Income tax (trading or miscellaneous)
Holder airdrop (no action)	No tax until disposal
Referral airdrop	Income tax

The key distinction: if you had to do something to receive it (claim, task, referral), it’s income. If it just appeared in your wallet, it’s not income — but CGT applies on sale.

Income vs CGT

Scenario	Tax
Token appears in your wallet with no action	No income — CGT on disposal
You claim an airdrop	Miscellaneous income at claim value
You complete tasks for an airdrop	Trading or miscellaneous income
Airdrop for holding a governance token	No income — CGT on disposal
Airdrop for providing liquidity	Miscellaneous income

What Counts as “No Action”

Action	Is It Action?
Snapshot of holders	No
Claim tokens on a website	Yes
Hold a specific NFT	No
Complete social tasks	Yes
Provide liquidity	Yes
Vote on governance	Usually no

Valuation at Receipt

Timing	Value
Claim-based airdrop	Market value when you claim
Task-based airdrop	Market value when received
No-action airdrop	No income event

For income: use the GBP value of the tokens at the moment you receive or claim them.

Disposal of Airdropped Tokens

Cost Basis	Amount
Income airdrop	Market value when taxed as income
No-action airdrop	Zero (or market value when received)

For no-action airdrops, the full sale proceeds are a gain (cost basis = £0).

Allowance Check

Income Type	Allowance
Airdrop income (miscellaneous)	£1,000 trading allowance
Airdrop income (trading)	£1,000 trading allowance
CGT on airdrop sale	£3,000 CGT allowance

Record Keeping for Airdrops

Record	Why
Date received	Income timing
Market value at receipt	Income or cost basis
Airdrop type	Income vs CGT treatment
Transaction hash	Proof of receipt
Actions taken	Claim, task, or no action
Disposal date and value	Gain calculation

Bottom Line

Airdrops that require action (claiming, tasks, referrals) are taxable as income when received. Airdrops that appear without action are not income — but CGT applies when you sell, with a cost basis of zero. The £1,000 trading allowance may cover small airdrop income. Track every airdrop with date, value, and type. HMRC expects accurate reporting of all crypto income.