- UK tax authority HMRC will treat deposits into DeFi lending protocols and liquidity pools as “no gain, no loss,” deferring capital gains tax until an actual economic disposal.
- The policy, effective April 2027, replaces HMRC’s 2022 guidance that triggered tax events on mere token transfers, addressing heavy administrative burdens flagged by stakeholders.
- Aave founder Stani Kulechov praised the shift as “the right direction” and credited industry feedback for shaping the policy.
HMRC confirmed Monday 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 sale. The change, detailed in a policy paper, takes effect from April 6, 2027, and will amend the Taxation of Chargeable Gains Act 1992.
HMRC estimates the rule will affect around 700,000 individuals and trustees using crypto loans and liquidity pools. Under previous 2022 guidance, moving tokens into a DeFi arrangement could itself be a disposal, leaving users facing capital gains tax on paper before any sale occurred. Stakeholder feedback flagged this produced disproportionate administrative burdens.
The measure applies “no gain, no loss” treatment to lending a single cryptoasset, borrowing one, and supplying tokens to an automated market maker. A gain or loss now only arises on a real disposal, or, in a liquidity pool, if a user withdraws more or fewer tokens than deposited. Collateral posted to borrow against will also be disregarded for capital gains tax.
Aave founder Stani Kulechov called the approach “the right direction” in a tweet, arguing any other treatment would have saddled taxpayers with heavy paperwork. He cast the outcome as evidence that industry feedback can shape policy, likening it to what he described as industry influence on a £20,000 cap on individual stablecoin holdings. The measure’s final costing still needs certification by the Office for Budget Responsibility, giving UK crypto users more than a year to adjust.
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