From 6 April 2027, the UK will treat most transactions based on crypto loans and liquidity pools as ‘no gain, no loss’ (NGNL) disposals.
This means Capital Gains Tax is deferred until you make an economic disposal of your cryptoassets, rather than being triggered the moment you lend tokens or enter a pool.
The government announced this measure on 13 July 2026, alongside its new policy on stablecoin taxation.
It applies to individuals and trustees, and HMRC estimates it will affect around 700,000 people who use crypto loans and liquidity pools.
This is a big deal for anyone active in DeFi.
The current rules can generate tax bills for transactions in which you have not actually cashed out anything. The new rules fix that.
As Crypto Accountants, we deal with these situations every week, so this guide explains the changes in plain terms.
Why are HMRC Tax Rules Changing?
HMRC published guidance in 2022 setting out how existing law applies to crypto loans and liquidity pools.
Under that interpretation, lending your tokens or depositing them into a pool usually counts as a disposal.
That triggers Capital Gains Tax, even though you expect to get your tokens back.
Stakeholders pushed back hard. They argued the treatment created disproportionate admin burdens and tax bills that did not match economic reality.
So HMRC listened. It ran a call for evidence in 2022, a full consultation in 2023, and published a summary of responses at Budget 2025.
This measure is the result of that four-year process.
When Do the New Rules for Crypto Loans and Liquidity Pools Start?
The rules take effect from 6 April 2027 for individuals and trustees. Transactions before that date still fall under the current treatment, so a loan or pool entry made in 2026 follows today’s rules.
The measure amends the Taxation of Chargeable Gains Act 1992. It covers three specific scenarios, and each works slightly differently.
How Will the Authorities Tax Crypto Lending?
Lending your cryptoassets will no longer trigger an immediate Capital Gains Tax charge under the new HMRC tax rules.
Under the new rules, entering a Single Cryptoasset Lending Arrangement is treated as a disposal on a ‘no gain, no loss’ basis.
The same applies when the loan ends and you swap your interest back for the same type of tokens.
What Is a Single Cryptoasset Lending Arrangement?
It is any arrangement where you hand over qualifying cryptoassets and hold the right to receive the same number of those cryptoassets back, plus a return.
Economically, that is a loan, so HMRC will now tax it like one.
Say you lend 2 ETH on a DeFi platform. Under current rules, that transfer is a disposal at market value, and you might owe CGT on the gain since you bought the ETH.
Under the new rules, no gain arises at that point.
Tax is deferred until you make a real economic disposal, such as selling the ETH after you get it back.
Note that any yield you earn is a separate matter and falls under Income Tax.
How Will the Authorities Tax Crypto Borrowing?
Borrowed cryptoassets will be treated as acquired at market value on the day you borrow them.
When you return the same type of tokens, you are treated as disposing of them for that same value.
This creates a clean, symmetrical treatment.
And there is one more helpful rule. Any collateral you post under the borrowing arrangement is disregarded for Capital Gains Tax purposes.
So locking up your Bitcoin as collateral will not trigger a disposal.
How Will the Authorities Tax Liquidity Pools?
Entering a liquidity pool will be treated as a ‘no gain, no loss’ disposal.
The policy calls these Automated Market Making Arrangements, meaning smart contract arrangements where you hold rights to two or more types of qualifying cryptoassets.
What Happens When You Exit a Pool?
Exits are where the new rules get clever. If you withdraw the same quantity of tokens you put in, the exit is also treated on an NGNL basis. No gain, no loss, no tax event.
But pools rarely return exactly what you deposited. If you receive more tokens than you invested, a gain arises on the difference. If you receive fewer, perhaps due to impermanent loss, a loss arises on the shortfall.
Suppose you deposit 1,000 USDC and 0.5 ETH into a pool. Entry triggers no tax. Later, you exit and receive 1,050 USDC and 0.48 ETH.
The extra 50 USDC creates a taxable gain by reference to that difference. The 0.02 ETH shortfall creates a loss you can use. Everything else stays deferred until you sell.
Who Do These HMRC Tax Rules Apply To?
The rules apply to individuals and trustees only. HMRC expects no impact on businesses or civil society organisations, and companies continue under their own Corporation Tax framework.
Around 700,000 people in the UK engage in crypto loan and liquidity pool transactions, according to HMRC’s estimates.
Crypto owners skew young, with 16-to 25-year-olds making up an estimated 80% of holders.
What Should You Do Before April 2027?
Timing now matters more than ever.
Crypto-backed loans and pool entries made before 6 April 2027 follow the current disposal rules, while those made after benefit from deferral.
Anyone planning significant DeFi activity should map out which side of that line their transactions fall on.
Keep detailed records too. Under the new rules, you will need to track the exact quantities you invest and receive back, because the gain or loss on pool exits depends on that difference.
A Crypto Tax Accountant can help you set up tracking that satisfies HMRC.
Get Ahead of the New DeFi Tax Rules!
These rules simplify DeFi taxation, but the transition creates real planning questions around timing, record-keeping, and pool exit calculations.
Our team at Crypto Accountants helps individuals and trustees structure their lending and liquidity pool activity with confidence.
Book a FREE 30-minute consultation to speak with a Crypto Tax Accountant today.
Disclaimer: This article is for general information only and does not constitute tax, legal, or financial advice. The measure described is a policy proposal, and the final legislation may differ. Always seek professional advice based on your own circumstances before acting.
