Tax Regarding DeFi Crypto UK | HMRC Current Tax Rules

DeFi is new territory and therefore, there are no specific guidelines on DeFi tax by the HMRC. That being said, you still need to pay tax on DeFi transactions by applying the current rules of tax by the HMRC of which you shall pay either Capital Gains Tax or Income Tax.

Type of Taxes

The type of tax you will be liable to pay depends on the following:

• Selling or swapping coins – Capital Gains Tax

• Acquiring interest – Income Tax

• Borrowing – Tax-free

• Paying interest – Tax-free, except when paying in crypto, in which you will be liable to pay Capital Gains Tax

• Acquiring NFTs – Tax-free

• Selling NFTs – Capital Gains Tax

• Exchanging NFTs – Capital Gains Tax

• Staking – Income Tax

• Yield farming – Income Tax

• Acquiring liquidity tokens – Capital Gains Tax or Income Tax contingent on whether you are increasing an asset’s value or acquiring new coins.

• Adding liquidity– Tax-free, except if you receive a token, in which you will be liable to pay Capital Gains Tax

• Removing liquidity – Tax-free, except if you receive a token, in which you will be liable to pay Capital Gains Tax

• Earning through condition-based protocols – Income Tax

• Gains received from margin trading and options protocols – Capital Gains Tax

Crypto Accountants UK

Being a new area, Crypto Accountants has ensured to be well-versed in this area so that we are your go-to destination for your DeFi tax needs and requirements.

To contact us, visit our website at: https://www.cryptoaccountants.live/