NFT Tax UK: How HMRC Taxes Buying, Selling, and Creating NFTs

HMRC treats NFTs as assets subject to Capital Gains Tax, with special rules for creators.

Buying an NFT

Action	Tax Event
Buy NFT with ETH	Disposal of ETH (CGT applies)
Gas fee	Part of NFT cost basis
Receive NFT	No tax

Cost basis = purchase price + gas fees.

Selling an NFT

Action	Tax Event
Sell NFT for crypto	Disposal of NFT
Accept ETH	CGT on gain
Accept another NFT	Disposal + acquisition

Gain = sale value — cost basis.

NFT Creator Tax

Activity	Tax Treatment
Occasional sale (hobby)	CGT
Regular minting and sales	Income Tax (trading)
Commissioned artwork	Income Tax
Royalties from secondary sales	Income (miscellaneous or trading)

Royalty Income

Royalty Type	Tax Treatment
Creator royalties (e.g., 5% on secondary sales)	Income — market value when received
Occasional royalties	Miscellaneous income
Regular royalties (professional creator)	Trading income

NFT Airdrops

Scenario	Tax Treatment
Free airdrop to wallet holders	Income at market value when received
Airdrop requiring action	Income at market value
Unsolicited dust airdrop	Not significant, but worth tracking

NFT-to-NFT Swaps

Event	Tax Treatment
Swap NFT A for NFT B	Disposal of A, acquisition of B
Gain/loss on A	Market value of B — cost of A
If NFTs similar value	Still a disposal

Losses on NFTs

Rule	Details
NFT losses allowable	Yes, same as crypto
Wash sale rules	No specific NFT rule (unlike USA)
Matching	Same-day, 30-day bed and breakfasting rules apply

Record Keeping for NFTs

Record	Why
Purchase date + cost	Cost basis
Gas fees	Part of cost basis
Sale date + proceeds	Disposal value
Creator costs (gas, royalties)	Deductible if trading
Royalties received	Income recording

Bottom Line

NFTs are subject to CGT on disposal. Creators minting regularly are likely trading (Income Tax). Royalties are taxable income. Track every transaction with gas fees. Losses are allowable. The £3,000 CGT allowance applies to combined NFT and crypto gains.