UK delays crypto tax on DeFi loans and pools until disposal

From April 2027, the UK will defer capital gains tax on crypto loans and liquidity pools until actual disposal, easing the immediate tax burden for DeFi users.

The UK government has introduced a major update to the taxation of cryptoasset loans and liquidity pool transactions. Starting April 6, 2027, capital gains tax for individuals and trustees will be deferred until an actual economic disposal occurs, rather than being triggered at the time of the transaction. This "no gain, no loss" approach means that transferring cryptoassets into lending protocols or liquidity pools will not result in an immediate tax event. The new rules apply when users receive the same type and quantity of cryptoassets as initially deposited. Tax will only be due when assets are ultimately sold, swapped, or spent. Borrowed assets are treated as acquired at market value, and collateral is ignored for tax purposes. The policy aims to align crypto taxation with traditional finance, reduce the immediate tax burden on DeFi users, and foster a more favorable environment for crypto investors in the UK. However, any difference between the amount deposited and withdrawn from a pool may still result in a taxable gain or loss.