HM Revenue & Customs (HMRC) has reported a significant shift in the UK’s tax policy, deferring Capital Gains Tax (CGT) on cryptoassets deposited into Decentralized Finance (DeFi) lending protocols and liquidity pools. This change, effective from April 6, 2027, will amend the Taxation of Chargeable Gains Act 1992, moving away from previous guidance that treated such deposits as taxable disposals.
Under the new rules, depositing cryptoassets into DeFi lending protocols and liquidity pools will no longer be considered a taxable disposal. Instead, CGT will be deferred until a genuine economic disposal of the assets occurs. This ‘no gain, no loss’ treatment applies to several DeFi activities, including lending a single cryptoasset, borrowing one, and supplying tokens to automated market makers. Consequently, entering or exiting these arrangements using the same asset will not trigger a tax event.
A taxable gain or loss will now arise only upon a real disposal of the assets. In the context of liquidity pools, a tax event is triggered if a user withdraws a different quantity of tokens than they initially deposited. Furthermore, collateral posted to borrow against cryptoassets will also be disregarded for CGT purposes.
HMRC estimates that this policy change will affect approximately 700,000 individuals and trustees. This update addresses concerns raised by stakeholders regarding disproportionate administrative burdens, aiming to align tax treatment more closely with the economic realities of DeFi transactions. Previously, under HMRC’s 2022 guidance, the act of moving tokens into a DeFi arrangement could itself be deemed a disposal, potentially triggering CGT even before any sale of the underlying asset.
The legislative process for this change has been ongoing, starting with a call for evidence in 2022, followed by a consultation in 2023, and a summary of responses published at Budget 2025. The measure’s final costing is subject to certification by the Office for Budget Responsibility.
Industry figures have reacted positively to the development. Stani Kulechov, founder of Aave, described the approach as being “the right direction,” suggesting that alternative treatments would have imposed significant paperwork on taxpayers. Kulechov also noted this outcome as an example of how industry feedback can influence policy, drawing a parallel to past industry input on a £20,000 cap for individual stablecoin holdings. He also highlighted separate HMRC plans to tax stablecoins more akin to traditional currency.
The shift signifies a maturing regulatory landscape for DeFi in the UK, with the growing body of tax rules reflecting the sector’s development. While the new rules are set to take effect in April 2027, providing users and protocols with over a year to adapt, the final costing requires official certification.
Why This Matters
The materials describe a narrow update: HMRC has reported that depositing cryptoassets into DeFi lending protocols and liquidity pools will no longer be considered a taxable disposal. The measure’s final costing still needs certification by the Office for Budget Responsibility.
Broader Context
Source materials place the factual news in this context: The UK’s HM Revenue & Customs has reported that depositing cryptoassets into DeFi lending protocols and liquidity pools will no longer count as a taxable disposal, deferring any capital gains tax until an investor makes a genuine economic disposal of the assets.
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