Part 9 - The chain of crypto taxes

Play-to-Earn (P2E) is a relatively new reward mechanism in the world of crypto, and at the time of writing, there is still no guidance from HMRC, as to how this should be treated. With blockchain based gaming, NFT’s and their associated uses, P2E gaming is going to become big business (think Fortnite but on an even greater and more engaging scale!).

As with other ‘earned’ crypto, your P2E rewards should be regarded as miscellaneous income and reported on a tax return. If any other income you earn or receive in a tax year already utilises your tax-free personal allowance, you will have a tax liability to settle with HMRC. The P2E profits may be calculated after deduction of any expenses derived in the earning of the profits, but will be limited to items like electricity, software and hardware etc. If you are regarded as a professional gamer, HMRC will consider you as self-employed and trading as a business, in which case you will be required to account and pay your taxes as a business (see Article 3 in this series).

When the P2E crypto rewards are sold, capital gains tax might become payable (see Article 2 in this series).