UK Defers Capital Gains on Crypto Lending and Liquidity Pools
Vexoda Newsroom
The UK tax authority has introduced a 'no gain, no loss' approach for crypto disposals related to lending and liquidity pools starting April 6, 2027. This move is expected to impact about 700,000 indi
The UK government has introduced a significant change in tax policy regarding certain cryptocurrency transactions. Starting on April 6, 2027, HM Revenue and Customs (HMRC) will adopt a 'no gain, no loss' approach for the disposal of crypto assets related to lending and liquidity pools.
According to HMRC, this measure aims to defer capital gains tax until an economic disposal is made. The change is expected to impact approximately 700,000 individuals and trustees who engage in these activities. This policy shift marks a departure from the previous guidance on crypto liquidity pools and lending issued by HMRC following a consultation period.
Under current UK law for capital gains related to crypto transactions, taxpayers pay between 18% to 24%, depending on their tax bracket. The new 'no gain, no loss' approach is designed to simplify the administrative burden on taxpayers who participate in these arrangements. This measure aligns more closely with the economic reality of such activities.
Industry leaders have welcomed this change. Stani Kulechov, CEO of Aave, commented that it was “the right direction” driven by industry feedback indicating that an alternative approach would impose significant administrative challenges on taxpayers.
The move is part of a broader effort to address the complexities and ambiguities surrounding crypto taxation in the UK. It reflects growing recognition within regulatory bodies of the need for clearer guidelines to support fairer tax treatment. However, it also highlights ongoing debates about how best to regulate this emerging asset class.
Traders should monitor future developments closely as HMRC continues to refine its policies on cryptocurrency transactions. Additionally, they may want to consider the broader implications of similar measures being considered in other jurisdictions and their potential impact on global crypto markets.
Source: Cointelegraph. Summarized and rewritten by the Vexoda Newsroom. This is market news, not financial advice.