UK HMRC to defer crypto lending tax until 2027 with “no gain, no

1. Lede
   HMRC announced that from 6 April 2027 qualifying crypto‑lending and liquidity‑pool transactions will receive “no gain, no loss” capital‑gains‑tax treatment, meaning tax is only due when the underlying crypto is finally disposed — a change that could impact roughly 700,000 UK participants [1].

2. At a glance

3. What the new rules cover
   The revised framework applies to individuals and trustees who place crypto into qualifying lending arrangements or automated market‑making (AMM) pools. When users receive the same type and quantity of crypto they originally contributed, the transaction is treated as having no immediate gain or loss; any difference between deposit and withdrawal amounts will generate a taxable event [2]. Borrowed crypto is deemed acquired at market value at the time of borrowing, and collateral used in the transaction is excluded from capital‑gains calculations [1].

4. Background and rationale
   HMRC’s 2022 guidance had treated deposits into lending platforms and liquidity pools as taxable disposals, prompting complaints that the rule created “unnecessary reporting difficulties” for DeFi participants [1]. After a call for evidence in 2022 and a formal consultation in 2023, the agency revised the Taxation of Chargeable Gains Act 1992 to align tax treatment with the economic substance of these activities [2]. The change is part of a broader UK effort to position the country as a digital‑asset‑friendly jurisdiction, alongside recent stablecoin and crypto‑service‑provider legislation [2].

5. What to watch

• Price‑trigger levels – Monitor crypto price movements around the dates when users are likely to liquidate holdings, as these could generate the first taxable events under the new regime.
• Regulatory updates – HMRC will publish final cost assessments for the measure, which the Office for Budget Responsibility will review before any fiscal updates.
• Industry response – Track statements from major UK DeFi platforms on how they will adapt compliance processes to the “no gain, no loss” framework.

The reform delays tax liability until a genuine economic disposal occurs, reducing administrative burden for DeFi users while preserving the UK’s existing capital‑gains‑tax rates of 18 % for basic‑rate and 24 % for higher‑rate taxpayers on crypto disposals outside the qualifying arrangements [2]. How the new rules influence user behaviour and the broader UK crypto ecosystem remains to be seen.