HMRC will treat certain crypto lending and liquidity pool transactions as “no gain, no loss” from April 2027, deferring Capital Gains Tax until users make an economic disposal. The measure is expected to affect about 700,000 individuals and simplify tax reporting for DeFi users.
Key Takeaways
HMRC will defer capital gains tax on some DeFi loans and AMMs from April 6, 2027.About 700,000 UK users could see simpler crypto tax reporting under HMRC rules.New HMRC rules tax gains at economic disposal, with OBR review to follow.The measure applies to individuals and trustees and will amend the Taxation of Chargeable Gains Act 1992.
HMRC Targets DeFi Tax ComplexityHMRC opened a call for evidence in July 2022, followed by a consultation in 2023. It published a summary of responses at Budget 2025 and confirmed the new approach on July 13, 2026.
The tax authority said the policy objective is fairness. Gains and losses should generally be recognized only when a participant has made an actual economic disposal of cryptoassets.
Lending and Liquidity Pool Rules DefinedThe measure covers three main scenarios.
For single cryptoasset lending arrangements, acquiring or disposing of an interest in exchange for cryptoassets of the same type as those invested will be treated on a no-gain-no-loss basis.
For borrowing arrangements, borrowed cryptoassets will be treated as acquired at market value at the time of borrowing. When assets of the same type are returned, the borrower will be treated as disposing of them for the same value. Any collateral provided will be ignored for Capital Gains Tax purposes.
On exit, the treatment applies only to the extent that they receive the same quantity as originally invested. Any difference will create a taxable gain or loss. HMRC said the measure is not expected to have a significant macroeconomic impact.
