# UK HMRC proposes “No Gain, No Loss” tax treatment for crypto loans

**Published:** 2026-07-19T17:25:19.793Z  
**Topic:** Crypto Lending  
**Sentiment:** neutral  
**Publisher:** TrendWatcher — https://www.trendwatcher.in/article/2f70033e-b379-451b-9a15-0c1f1c1da9ed

UK HMRC plans to defer capital gains tax on crypto DeFi lending and liquidity pool deposits from April 6 2027, affecting up to 700,000 users and simplifying

The UK government will treat deposits into qualifying crypto‑lending and DeFi liquidity‑pool arrangements as “No Gain, No Loss” events, deferring any capital‑gains tax until the underlying asset is economically disposed of, a move aimed at reducing administrative burden for roughly 700,000 individuals and trustees [2].

| At a glance | |
|---|---|
| Policy change | “No Gain, No Loss” CGT treatment for crypto loans & liquidity pools |
| Effective date | 6 April 2027 |
| Affected users | ~700,000 individuals and trustees |
| Catalyst | HMRC draft legislation to align tax with economic reality of DeFi [1] |

## Why the change matters  
HMRC says the current rules can label a simple transfer of crypto into a lending protocol as a taxable disposal, even though investors retain exposure to the same asset. By deferring the gain or loss until a genuine economic disposal occurs, the proposal aligns tax treatment with the underlying economics of DeFi activities [1]. The measure amends the Taxation of Chargeable Gains Act 1992 and follows a consultation that began in 2022 after stakeholders highlighted disproportionate administrative burdens [2].

## Scope and impact  
The “No Gain, No Loss” treatment applies only to qualifying crypto‑asset loans and automated market‑making (AMM) liquidity pools where the investor receives an interest in the same type of crypto they supplied. Borrowed crypto is valued at market price at the time of borrowing, and any collateral is ignored for CGT purposes [2]. The policy is expected to affect about 700,000 UK individuals and trustees who engage in these DeFi transactions, but it does not extend to all crypto disposals such as swaps, sales, or spending [2][4].

## What to watch  
- **Legislative progress** – HMRC is seeking technical feedback on the draft rules; final adoption will depend on the parliamentary process.  
- **Implementation date** – The deferred CGT treatment is slated to start on 6 April 2027; any delay could affect planning for the 2027‑2028 tax year.  
- **Regulatory signals** – Watch for further UK guidance on broader crypto‑asset taxation, which could expand or refine the current scope.  

The proposal signals a shift toward treating DeFi activities more like traditional finance, reducing immediate tax liabilities and potentially encouraging greater participation in UK crypto markets, while leaving the ultimate fiscal impact to be assessed after implementation.

## Sources
1. CNBCTV18 — [UK proposes 'No Gain, No Loss' tax treatment for select crypto transaction](https://www.cnbctv18.com/world/uk-proposes-no-gain-no-loss-tax-treatment-select-crypto-transaction-19946665.htm)
2. Bitcoin Magazine — [UK Adopts ‘No Gain, No Loss’ Tax Treatment for Crypto Lending and Liquidity Pools](https://bitcoinmagazine.com/news/uk-adopts-no-gain-no-loss-tax-crypto)
3. Crypto Briefing — [UK defers crypto capital gains tax for loans, liquidity pools from 2027](https://cryptobriefing.com/uk-defers-crypto-capital-gains-tax-for-loans-liquidity-pools-from-2027/)
4. Decrypt — [UK to Defer Capital Gains Tax on DeFi Lending, Liquidity Pool Deposits](https://decrypt.co/373481/uk-to-defer-capital-gains-tax-on-defi-lending-liquidity-pool-deposits)

---
Cite as: TrendWatcher, "UK HMRC proposes “No Gain, No Loss” tax treatment for crypto loans", https://www.trendwatcher.in/article/2f70033e-b379-451b-9a15-0c1f1c1da9ed