UK Tax Authority Defers Capital Gains on Crypto Lending Arrangements

The UK government has announced plans to introduce a new tax policy for crypto lending and liquidity pool arrangements, which will defer Capital Gains Tax on qualifying transactions.

From April 6, 2027, eligible loans and liquidity pools will be treated as 'no gain, no loss' (NGNL), meaning gains and losses will only be recognized when participants dispose of the crypto assets. The new framework aims to better align tax treatment with the underlying economic substance of these arrangements.

The policy change follows years of consultation between HM Revenue & Customs (HMRC) and industry stakeholders, which identified the existing interpretation of tax rules as creating disproportionate administrative burdens for participants in crypto asset lending and liquidity pools. The proposed approach is expected to affect around 700,000 individuals involved in these transactions.

The new legislation will amend the Taxation of Chargeable Gains Act 1992 and apply from April 6, 2027, giving affected taxpayers and service providers time to prepare for the new framework.