UK HMRC to defer crypto lending tax until 2027 under new rules

1. Lede
   From 6 April 2027, HM Revenue & Customs will treat qualifying crypto‑lending deposits and liquidity‑pool contributions as non‑taxable events, deferring capital‑gains tax until the underlying assets are sold—a change that could affect roughly 700,000 UK participants.

2. At a glance

3. What the new rules cover
   HMRC’s updated framework applies a “no gain, no loss” approach to crypto‑lending arrangements and automated market‑making pools where users receive the same type of token they contributed. Under the new regime, tax is only due when the user makes an economic disposal—i.e., sells, swaps, or otherwise disposes of the underlying asset [1]. Borrowed crypto will be valued at market price at the time of borrowing, and collateral supplied in these arrangements will not generate a CGT event [1].

4. Background and industry response
   The change reverses 2022 guidance that treated every deposit into DeFi protocols as a taxable disposal, a rule that industry groups argued created “unnecessary reporting difficulties” [1]. HMRC’s position follows a two‑year consultation process that began with a 2022 call for evidence and a formal 2023 consultation, attracting responses from 32 organisations including Aave, Binance, Deloitte and CryptoUK [2]. Participants consistently favoured the “no gain, no loss” (NGNL) model, warning that alternative “repo‑style” rules would increase complexity for retail users [2].

5. Scope and limits
   The deferment applies only to qualifying arrangements where the user receives the same quantity of crypto they originally supplied. Any excess returned—whether more or fewer tokens—will be taxed as a gain or loss respectively [1]. The broader UK crypto tax regime remains unchanged: disposals such as selling, swapping, or spending tokens continue to attract CGT at 18 % for basic‑rate taxpayers and 24 % for higher‑rate taxpayers [1]. Income from mining, staking, airdrops and employment‑related crypto remains subject to income‑tax rules [2].

What to watch

• Implementation timeline – HMRC must publish detailed guidance before the 6 April 2027 start date.
• Eligibility criteria – Monitoring which lending platforms and liquidity pools qualify under the “same‑token” rule will determine the practical impact on users.
• Future fiscal impact – The Office for Budget Responsibility will assess any revenue effects in upcoming budget reviews.

The reform aligns tax liability with actual economic outcomes, reducing administrative burdens for a sizable segment of UK DeFi participants while preserving the overall integrity of the country’s crypto‑tax framework.