The UK government has announced plans to defer Capital Gains Tax (CGT) on certain cryptoasset lending and liquidity pool transactions, marking a significant policy shift. Under new rules proposed by HM Revenue & Customs (HMRC), qualifying arrangements will be treated on a “no gain, no loss” basis, delaying tax liability until assets are economically disposed of. The measure, affecting an estimated 700,000 individuals, follows years of industry consultation and is scheduled to take effect from April 6, 2027, amending the Taxation of Chargeable Gains Act 1992.
The UK government has unveiled plans to defer Capital Gains Tax on certain cryptoasset lending and liquidity pool transactions. This marks a significant change to how digital asset users are taxed.
Under a new policy paper published on July 13, qualifying cryptoasset loans and liquidity pool arrangements will generally be treated on a “no gain, no loss” [NGNL] basis. Instead of triggering CGT when cryptoassets are lent or deposited into eligible liquidity pools, tax will typically be deferred until the assets are economically disposed of.
According to the policy paper, the measure is intended to better align the tax treatment with their underlying economic substance. HMRC said the new framework will treat certain disposals involving cryptoasset loans and liquidity pools as “no gain, no loss”.
The proposal covers three types of arrangements: single cryptoasset lending arrangements, single cryptoasset borrowing arrangements, and automated market making [AMM] arrangements. For AMM arrangements, individuals exchanging cryptoassets for liquidity pool interests will generally qualify for NGNL treatment.
The policy follows several years of consultation between HMRC and industry participants. Feedback on its 2022 guidance highlighted that the existing interpretation created disproportionate administrative burdens for participants.
The department estimates the measure will affect around 700,000 individuals involved in these transactions. HMRC said those taxpayers will benefit from a framework that is easier to understand.
Unlike a tax exemption, the proposal does not remove Capital Gains Tax obligations but changes when gains or losses are recognized. The legislation will amend the Taxation of Chargeable Gains Act 1992 and will apply from April 6, 2027, giving affected taxpayers time to prepare.
