HM Revenue & Customs announced that certain cryptoasset loan and automated market-making liquidity pool disposals will receive no-gain-no-loss tax treatment from April 6, 2027. The policy defers Capital Gains Tax until users make an economic disposal of the underlying cryptoasset. HMRC confirmed the measure on July 13, 2026, following a call for evidence opened in July 2022 and a consultation in 2023. The change addresses industry concerns that the previous 2022 guidance created taxable events misaligned with the economic reality of DeFi transactions. The policy applies to individuals and trustees and is expected to affect approximately 700,000 UK users who engage in crypto lending or liquidity pool arrangements.
Under the current UK regime, selling, swapping, or spending crypto can trigger Capital Gains Tax at rates of 18% for basic-rate taxpayers and 24% for higher-rate taxpayers. The new approach narrows that treatment for specific DeFi arrangements where users transfer crypto into a lending protocol or liquidity pool without exiting their economic position. The measure will amend the Taxation of Chargeable Gains Act 1992.
HMRC Policy Development Timeline and Stakeholder Response
HMRC opened a call for evidence in July 2022 in response to years of industry concern over its 2022 guidance on crypto lending and liquidity pools. Stakeholders argued that the old interpretation could create taxable events that did not match the economic reality of the transaction. HMRC followed with a consultation in 2023 and published a summary of responses at Budget 2025. The tax authority confirmed the new approach on July 13, 2026.
HMRC stated the policy objective is fairness, with gains and losses recognized only when a participant has made an actual economic disposal of cryptoassets. The tax authority said the 700,000 affected users should benefit from a framework that is easier to understand and engage with. HMRC said the measure is not expected to have a significant macroeconomic impact.
Three Tax Treatment Scenarios Under New HMRC Framework
The 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.
For automated market-making arrangements, such as smart contract liquidity pools involving two or more qualifying cryptoassets, users will receive no-gain-no-loss treatment when they contribute the same type of assets. 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.
FAQ
What did HMRC announce on July 13, 2026, regarding crypto tax treatment?
HMRC confirmed that certain cryptoasset loan and automated market-making liquidity pool disposals will receive no-gain-no-loss tax treatment from April 6, 2027. The policy defers Capital Gains Tax until users make an economic disposal of the underlying cryptoasset.
How many UK users will be affected by HMRC's new crypto tax framework?
HMRC stated the measure is expected to affect approximately 700,000 individuals who use crypto loans or liquidity pool arrangements. The tax authority said these users should benefit from a framework that is easier to understand and engage with.
What are the current Capital Gains Tax rates for crypto in the UK?
Under the current UK regime, selling, swapping, or spending crypto can trigger Capital Gains Tax at 18% for basic-rate taxpayers and 24% for higher-rate taxpayers. The new HMRC policy narrows that treatment for specific DeFi arrangements.
