HM Revenue and Customs (HMRC) published a policy paper on 13 July 2026 introducing “no gain, no loss” treatment for selected cryptoasset lending and liquidity pool transactions, deferring capital gains tax until participants make an economic disposal of their assets.
The measure amends the Taxation of Chargeable Gains Act 1992 and takes effect from 6 April 2027, applying to individuals and trustees who enter these arrangements. HMRC frames the change as an alignment of tax treatment with the underlying economics of the transactions, recognising gains and losses only when a participant genuinely disposes of the cryptoassets rather than when tokens move into a protocol.
How The Deferral Applies Across DeFi
The paper sets out rules across three scenarios. Under single cryptoasset lending arrangements, a participant who acquires or disposes of an interest in exchange for cryptoassets of the same type as those invested falls under no gain, no loss treatment.
Single cryptoasset borrowing arrangements run on separate mechanics, with a borrower acquiring the borrowed cryptoassets at market value at the point of borrowing and, on transferring back assets of the same type, disposing of them for an amount equal to that value. Any collateral provided under the arrangement stays outside the capital gains tax calculation.
Automated market making arrangements, operated through smart contracts holding two or more qualifying cryptoassets, receive the same deferral. A participant acquiring an interest in exchange for same-type assets falls under no gain, no loss treatment, and disposing of an interest to reclaim same-type assets does too, provided the quantity received matches the quantity invested. Where the returned quantity differs, a gain or loss arises on that difference.
The framework builds on a proposal FinanceFeeds reported in November 2025, when HMRC first floated the no gain, no loss model and Aave founder Stani Kulechov called it a major win for UK DeFi users.
Who Benefits And Where Enforcement Stands
HMRC estimates the measure will affect roughly 700,000 individuals engaged in cryptoasset loan and liquidity pool transactions, giving them a framework the department describes as easier to understand and engage with. The change follows 2022 guidance that stakeholders said produced disproportionate administrative burdens, a call for evidence in mid-2022, and a consultation running from April to June 2023, with a summary of responses published at Budget 2025.
HMRC has not published a costing, noting that the Office for Budget Responsibility will certify figures at a future fiscal event, and expects no significant macroeconomic impact. Research it commissioned found younger owners aged 16 to 44 and male owners overrepresented among cryptoasset holders relative to the wider adult population.
The relief lands as HMRC sharpens enforcement, having sent almost 65,000 warning letters to suspected crypto tax evaders in the 2024–25 year and moved to collect full customer data from exchanges from January 2026, while retail investors regained tax-efficient exposure through the migration of crypto ETNs into Innovative Finance ISAs in April 2026.