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UK HMRC will apply a “no gain, no loss” rule to crypto lending and liquidity pools, affecting ~700,000 users and delaying CGT until a real disposal.
At a glance
| At a glance | |
|---|---|
| Effective date | 6 April 2027 |
| Affected users | ~700,000 individuals & trustees |
| Tax treatment | “No gain, no loss” for qualifying DeFi lending & liquidity pools |
| Current CGT rate | 18 % (basic) / 24 % (higher) on disposals |
HMRC’s policy paper amends the Taxation of Chargeable Gains Act 1992 to treat three DeFi scenarios as non‑taxable until a genuine disposal occurs. In a single‑asset lending arrangement, exchanging crypto for an interest in the same asset incurs no gain or loss. Borrowed crypto is recorded at market value at the time of borrowing, with any collateral ignored for CGT purposes. For automated market‑making (AMM) pools, users who withdraw the same quantity of the original token avoid a tax event; only a difference between deposited and withdrawn amounts triggers a gain or loss【1】.
The 2022 guidance counted moving tokens into DeFi protocols as a disposal, forcing taxpayers to calculate gains on paper even though no sale had taken place. Stakeholders argued this created “disproportionate administrative burdens,” prompting a call for evidence in 2022 and a formal consultation in 2023【2】. By aligning tax treatment with the economic substance of the transactions, HMRC aims to simplify compliance for the estimated 700 000 users and reduce paperwork, while the Office for Budget Responsibility will later assess any fiscal impact【1】.
Britain’s broader push to become a digital‑asset hub includes recent stablecoin oversight legislation and a push for clearer crypto regulation【2】. The UK’s move places it among the first major economies to formally recognize that DeFi lending and liquidity provision do not necessarily constitute a change in ownership, a stance echoed by industry leaders such as Aave founder Stani Kulechov, who called the policy “the right direction”【3】.
The reform postpones CGT liability for a large segment of UK DeFi participants, but its real impact will hinge on how quickly users and platforms adjust to the deferred‑tax regime and whether other countries follow suit.
Coverage is mostly measured — 157 of 166 reports stay neutral.
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AI-assisted synthesis by the TrendWatcher Editorial Desk · sourced from 3 outlets · Jul 15, 2026 · How we report
Users deposit cryptocurrency to earn interest as lenders, or they lock their digital assets as collateral to borrow funds without selling their holdings.
It is a decentralized financial service that operates across multiple blockchain networks, allowing users to lend and borrow assets on different chains to increase accessibility and liquidity.
Some platforms operate as decentralized protocols without credit checks, while others, such as Nexo, may obtain specific authorizations to offer regulated credit services within local consumer credit frameworks.
Primary risks include market volatility, the potential for collateral liquidation, and the fact that funds deposited on these platforms are typically not insured.