Bittensor (TAO and subnet tokens) and UK tax
Bittensor raises tax questions HMRC has never answered specifically. Its general crypto rules still apply, and where the answer is genuinely unclear, the safest course is one consistent, documented approach, agreed with your accountant.
What HMRC says, and what it doesn't
HMRC has no guidance written for Bittensor. Two general rules cover most of it:
- Selling, swapping or spending tokens is a disposal, taxed under Capital Gains Tax, with each type of token held in its own section 104 pool.
- Staking rewards are taxed as income at their sterling value when you receive them, unless your staking amounts to a trade. If you keep the rewards, Capital Gains Tax may apply when you later dispose of them.
How dynamic TAO changed things
Since dynamic TAO launched in February 2025, each subnet has its own token, often called alpha. Staking TAO into a subnet exchanges it for that subnet's alpha through a pool, at a rate that moves with supply and demand, and unstaking swaps it back. Staking on the root network keeps you in TAO. That one change turned many simple stakes into token exchanges.
Common situations
| What you did | Likely treatment | What makes it tricky |
|---|---|---|
| Bought, sold or held TAO | Capital Gains Tax when you dispose of it | Transfers between exchanges and your own wallets must be matched first |
| Staked TAO on the root network | Rewards taxed as income when received; Capital Gains Tax when sold | Rewards arrive constantly, so you need a sensible, consistent way to value them |
| Staked TAO into a subnet | Arguably a swap of TAO for alpha, so a disposal of TAO | HMRC hasn't confirmed this; record dates, amounts and sterling values |
| Earned alpha while staked in a subnet | An open question: income as it arrives, or part of the gain when you unstake | Changes both the tax rate and when it's due; agree one approach and use it every year |
| Unstaked alpha back to TAO | A disposal of alpha | Needs a cost for the alpha, which depends on the two rows above |
| Ran a miner or validator | Income, possibly as a trade, depending on how organised and commercial it is | Expenses and record-keeping matter more |
Where the treatment is open, there is no single "right" answer yet. The safest course is a reasonable approach, applied the same way every year and explained in your records.
Records to keep
- Your wallet addresses (coldkeys) and any exchange exports
- Every stake and unstake: date, subnet, TAO and alpha amounts, and the sterling value at the time
- Rewards received, with dates and values, which public blockchain explorers for Bittensor can help reconstruct
- A short note of the approach you took on the open questions, and why
Why tax software struggles
Many tools added Bittensor and subnet tokens only recently. Common problems are subnet tokens missing or priced at zero, stakes and unstakes shown as transfers or as sales at the wrong value, and rewards missing altogether. Check any software report line by line before relying on it.
Prefer to hand it over?
Bittensor is something we know first-hand: our engine was built on a real Bittensor history, including subnet staking. We reconcile every stake, unstake and reward, value them consistently, and list in your pack how each open question was treated, so you or your accountant can confirm the approach.
Sources
- HMRC Cryptoassets Manual, CRYPTO21200: staking
- HMRC Cryptoassets Manual, CRYPTO22100: what is a disposal
- Macrocosmos: dTAO is go, here's what you need to know (January 2025)
Want it done properly?
Start with a free check, or see how we handle this in crypto tax returns. Already have a report from tax software? A £99 Report Review checks it for problems like this.
Book a free checkGeneral information, not tax advice. Your own situation may differ; if you are unsure, speak to an accountant.