UK defers crypto CGT on lending and liquidity pools

The UK government has announced a significant change to the tax treatment of crypto assets, deferring Capital Gains Tax on certain lending and liquidity pool transactions until an investor makes an economic disposal. The new rules, set out in a policy paper published on July 13, 2026, are scheduled to take effect from April 6, 2027.

Under the proposed framework, qualifying crypto asset loans and liquidity pool arrangements will be treated on a "no gain, no loss" basis. This means that depositing crypto assets into eligible lending protocols or liquidity pools will no longer itself be considered a taxable event. Instead, any capital gain or loss will generally be deferred and recognized only when the assets are sold, swapped, or permanently withdrawn from the arrangement. The measure is estimated to affect approximately 700,000 individuals and trustees in the UK.

The change addresses a longstanding concern from the crypto industry regarding administrative burdens. Following its 2022 guidance, HM Revenue and Customs had treated the movement of tokens into a decentralized finance (DeFi) arrangement as a disposal, potentially creating a tax liability before any economic gain was...