HMRC defers CGT on certain crypto loans and liquidity pools

HM Revenue & Customs will treat certain crypto lending and automated market‑making (AMM) liquidity‑pool transactions as “no gain, no loss” from April 6, 2027, delaying Capital Gains Tax until an economic disposal. The change will amend the Taxation of Chargeable Gains Act 1992, applies to individuals and trustees, and is expected to affect about 700,000 UK users.

Under current rules, selling, swapping or spending crypto can trigger Capital Gains Tax at 18% for basic‑rate taxpayers and 24% for higher‑rate taxpayers. HMRC’s approach narrows the situations that create a taxable disposal by deferring recognition where a user’s economic exposure to the underlying asset does not change. The authority opened a call for evidence in July 2022, held a consultation in 2023, published a summary at the 2025 Budget and confirmed the policy on July 13, 2026.

HMRC set out separate treatments for common decentralised finance arrangements. In single cryptoasset lending, acquiring or disposing of an interest in exchange for cryptoassets of the same type 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 like assets are returned the borrower will be treated as disposing of them at that same value. Collateral provided in borrowing arrangements will be ignored for Capital Gains Tax purposes.

For automated market‑making liquidity pools that hold two or more qualifying cryptoassets, contributions of the same asset types will attract no‑gain, no‑loss treatment. On exit, the treatment applies only to the proportion of assets a participant receives that matches their original quantity. Any difference between what is returned and what was invested will create a taxable gain or loss.

HMRC stated, “gains and losses should generally be recognised only when a participant has made an actual economic disposal of cryptoassets.” The tax authority said it does not expect the change to have a significant macroeconomic impact and that the Office for Budget Responsibility will review the fiscal effects as part of its assessment.

The revision responds to industry concerns that HMRC’s 2022 guidance created taxable events that did not reflect the economic reality when tokens were moved into lending protocols or liquidity pools. HMRC described the review as staged and said the aim is to simplify tax reporting for DeFi users and reduce mismatches between technical disposals and real economic exits.