UK Defers Capital Gains Tax on Crypto Lending and Liquidity Pools From April 2027

Britain's tax authority will stop treating certain DeFi transactions as immediate taxable events. In a policy paper published Monday, 13 July, HM Revenue & Customs said it will apply "no gain, no loss" treatment to disposals involving cryptoasset loans and liquidity pools, deferring Capital Gains Tax (CGT) until a user makes an economic disposal of the underlying crypto, according to the UK government paper as reported by The Block. The change takes effect 6 April 2027 and is expected to affect around 700,000 individuals.

The rules cover three arrangements. First, acquiring or disposing of an interest in a single crypto lending arrangement, in exchange for the same type of cryptoasset invested, is treated on a no-gain-no-loss basis. Second, borrowing arrangements treat borrowed cryptoassets as acquired at market value at the time of borrowing, with collateral disregarded for CGT. Third, for automated market-making (liquidity pools run by smart contracts), a user acquiring an interest in exchange for the same type of cryptoasset is taxed no-gain-no-loss; on exit, that holds to the extent the user gets back the same quantity originally put in. Any difference between what was invested and what is received triggers a gain or loss on that difference.

The measure amends the Taxation of Chargeable Gains Act 1992 for individuals and trustees. HMRC said it aligns tax with the economics of these arrangements, recognizing gains and losses only at an economic disposal.

Key facts

• Effective date: 6 April 2027 (UK government policy paper, via The Block).
• Scope: ~700,000 individuals engaging in crypto loan and liquidity-pool transactions (policy paper).
• Current UK CGT on crypto disposals: 18% basic-rate, 24% higher-rate (The Block).
• Legal basis: amendment to the Taxation of Chargeable Gains Act 1992 (policy paper).
• Process trail: call for evidence July–August 2022; consultation 27 April–22 June 2023; response summary and approach at Budget 2025 (The Block).

The real-world read

This is HMRC cleaning up its own mess. The paper exists because HMRC's 2022 guidance — which could treat merely depositing crypto into a DeFi protocol as a taxable disposal, even with no economic gain — produced what stakeholders called disproportionate administrative burdens. So the "reform" is really a walk-back of an earlier interpretation, not a giveaway.

Note the timing: the fix was flagged in a 2022 call for evidence and consulted on in 2023, yet doesn't take effect until April 2027 — roughly five years from problem to remedy. And it isn't fully costed. HMRC says final costing is subject to scrutiny by the Office for Budget Responsibility at a future fiscal event, and that the measure carries no significant macroeconomic impact — so the revenue implications aren't yet on the table. This is a timing/deferral change, not tax relief: any real difference between what you put in and take out is still taxed.

Opinion, and whose

HMRC's view is that the change gives users an easier-to-understand framework and better matches tax to economic substance. That's the tax authority's own characterization; whether the 2027 rules simplify practice will depend on final legislation, which isn't published in full.

Sources

• The Block (Naga Avan-Nomayo), 14 July 2026 — reported the measure and figures, citing the UK government policy paper; also provided the 2022–2023 consultation history and current CGT rates. Reputable secondary source; not marketing. (The Block discloses Foresight Ventures as majority investor.)
• UK government / HMRC policy paper (primary), published 13 July 2026 — the underlying measure, cited via The Block; not independently reviewed here.

This is news, not financial or tax advice; consult a qualified adviser about your own situation.