UK government defers capital gains on certain crypto with ‘no gain, no loss’ approach

Key Takeaways

• According to Cointelegraph, HM Revenue and Customs (HMRC) will apply a “no gain, no loss” treatment to certain crypto disposals tied to lending and liquidity pools starting April 6, 2027.
• Cointelegraph reports the change is expected to affect roughly 700,000 individuals and trustees in the UK.
• Under current UK rules for the 2025-2026 tax year, capital gains on crypto are taxed at 18% to 24% depending on whether a taxpayer falls into the basic-rate or higher-rate band, Cointelegraph noted.

What HMRC Is Actually Changing

Cointelegraph reported that HMRC announced on Monday it would treat certain disposals connected to cryptocurrency lending and liquidity pool arrangements differently under capital gains law. Rather than triggering an immediate taxable event, these disposals will be classified as producing “no gain, no loss,” effectively pushing the tax calculation forward to a later point described by the authority as an “economic disposal.”

Per Cointelegraph’s account, this shift is set to take effect on April 6, 2027, and marks a departure from HMRC’s 2022 guidance on how crypto lending and liquidity pool transactions should be taxed. The new approach follows a period of consultation, according to the report.

HMRC framed the update as a matter of fairness, stating that the measure would align tax treatment more closely with how these arrangements actually function economically, so that gains and losses are generally recognized only once a participant carries out an economic disposal of the crypto assets involved, Cointelegraph reported.

Specifically, Cointelegraph detailed that the “no gain, no loss” tax classification would apply to the acquisition or disposal of an interest in a lending arrangement when it is exchanged for the same type of asset, to borrowed assets acquired at market value, and to comparable conditions involving automated market makers.

Why This Matters for Everyday Crypto Holders

For UK-based crypto users who lend out their tokens or supply assets to liquidity pools, the previous framework could create a tax obligation at the moment they entered or exited these arrangements, even when they had not converted their holdings into cash or realized a straightforward profit. Cointelegraph’s reporting indicates that this created what Aave founder and CEO Stani Kulechov described, in a Monday post on X, as an approach that industry feedback showed would otherwise cause significant administrative burden for taxpayers.

By deferring the capital gains calculation until an actual economic disposal takes place, the policy aims to reduce the number of taxable events tied purely to the mechanics of moving assets into or out of lending pools and liquidity arrangements. Cointelegraph’s figures suggest this could simplify recordkeeping and tax reporting for a substantial share of the roughly 700,000 people the change is expected to touch.

It is worth noting, based on Cointelegraph’s reporting, that the underlying capital gains rates themselves are not changing. Basic-rate and higher-rate taxpayers will continue to face the existing 18% to 24% range on crypto-related gains for the 2025-2026 period; what shifts is the timing of when a gain or loss must be recognized for certain lending and liquidity pool transactions.

The Political Backdrop

Cointelegraph’s report also touched on unrelated developments in UK politics that involve the crypto industry. Reform leader Nigel Farage, who resigned last week, will face a by-election in Clacton scheduled for August 13, and according to Cointelegraph he will not run uncontested. Stephen Newnham, leader of the Solana community group Superteam UK, announced on Tuesday that he will stand as an independent candidate against Farage, alongside other contenders including comedian and author Jon Harvey, who is running in costume as “Count Binface.”

Cointelegraph noted that Farage’s resignation, which he said was intended to let Clacton voters judge his record, comes amid reports that he received a $6.7 million donation from crypto billionaire Christopher Harborne, which Farage reportedly called a “reward” for the UK’s departure from the European Union and later a “gift.” The report also mentioned financial assistance from George Cottrell, described as a convicted fraudster with links to a crypto casino. While separate from the HMRC tax policy, Cointelegraph’s coverage places both stories within the broader context of the UK’s evolving relationship with the crypto sector.

Hype Check

Claim: The UK’s new “no gain, no loss” policy is being framed as a major tax break for crypto users. Reality: Cointelegraph’s reporting shows this is a deferral mechanism affecting the timing of capital gains recognition for specific lending and liquidity pool transactions, not a reduction in tax rates or an exemption from tax altogether; the existing 18% to 24% capital gains rates remain unchanged, and the policy does not take effect until April 6, 2027. Verdict: Substance. This is not financial advice.

Source

• Cointelegraph: UK government defers capital gains on certain crypto with ‘no gain, no loss’ approach

Researched with AI assistance, fact-checked and edited by a human. Not financial advice.