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UK HMRC to defer capital gains tax on some crypto lending from April 2027

UK HMRC to defer capital gains tax on some crypto lending from April 2027

Certain cryptoasset loans, borrowing arrangements and AMM liquidity pool transactions will be treated as no gain, no loss until an economic disposal, a change expected to affect about 700,000 participants.

Fact Check
The official GOV.UK HMRC policy paper 'Tax treatment of Cryptoasset Loans and Liquidity Pools' directly confirms every element of the claim: certain crypto asset loan and liquidity pool disposals treated as 'no gain, no loss' deferring CGT until an economic disposal, effective from 6 April 2027, affecting approximately 700,000 individuals. The Cryptobriefing report corroborates the announcement and effective dates. The primary government source leaves no material discrepancy with the claim.
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Summary

UK HM Revenue and Customs will apply a "no gain, no loss" Capital Gains Tax treatment to certain cryptoasset lending, borrowing and automated market maker liquidity pool arrangements from April 6, 2027, deferring tax until an economic disposal occurs. The change will apply to individuals and trustees and HMRC estimates it will affect about 700,000 participants. Under the new rules, single-asset lending deposits and certain AMM pool deposits of the same type of cryptoasset will not trigger an immediate gain or loss, while in borrowing arrangements the borrowed crypto will be treated as acquired at market value at the time of borrowing and posted collateral will be excluded from CGT calculations. On AMM withdrawals, tax treatment will remain neutral if the amount returned matches the amount originally deposited, with any gain or loss recognized only on any difference. HMRC said the policy responds to concerns that its 2022 guidance created excessive administrative burdens for taxpayers.

Terms & Concepts
  • automated market maker liquidity pool: A cryptoasset pool run by smart contracts that prices trades automatically rather than through a traditional order book.
  • Capital Gains Tax: Tax charged on profits made when an asset is disposed of.
  • economic disposal: A transaction that effectively realizes an asset's value for tax purposes.