UK draft rules: no gain, no loss for crypto lending and liquidity pools
Draft Finance Bill 2026-27 clauses would defer CGT on qualifying lending, borrowing and pool deposits for individuals from 6 April 2027.
On 13 July 2026 the UK government published a policy paper and draft legislation that would stop many crypto lending, borrowing and liquidity pool deposits from being taxed as disposals for individuals and trustees [1][2]. If enacted, the change applies from 6 April 2027 [1]. It does not apply to companies [1][2].
What changed
Today, HMRC's guidance asks whether beneficial ownership of tokens passes when you lend them or put them into a protocol. If the recipient can deal with the tokens as it wants, that points to a disposal, which can create a capital gains charge with no cash received [4]. The draft rules replace that analysis for qualifying arrangements with a deferral, so tax is charged on the real economic exit instead [1].
The draft inserts a new Part 4A into the Taxation of Chargeable Gains Act 1992 covering three arrangement types [2]:
- Single cryptoasset lending: putting tokens into a qualifying lending arrangement in exchange for an interest is treated as no gain, no loss. When tokens of the same type come back, the return of up to the number invested is also no gain, no loss; any extra consideration is taxed separately [1][2].
- Borrowing: the borrower is treated as acquiring the borrowed tokens at market value when borrowed, and as disposing of them for that same value when they are returned. Collateral provided is disregarded unless it becomes irrecoverable [1][2].
- Automated market making (liquidity pools): depositing tokens into a qualifying pool is no gain, no loss. On exit, tokens returned up to the number of each type invested are no gain, no loss, and a gain or loss arises by reference to any difference [1][2].
Conditions matter. A lending interest must meet a low risk of loss condition, meaning no significant risk the lender cannot get back the same number of eligible tokens, plus either an unconnected parties or a widely available condition. Pools must meet a widely available condition [2]. Eligible tokens are defined as tokens of the same type as those invested [2]. The draft also has transitional rules for interests held before 6 April 2027 [2].
What it means for finance teams
For UK individuals and trustees, a pool or lending position would carry the original cost of the tokens deposited, and the gain would sit with the exit. Records need to show, per position, how many tokens of each type went in and came out, because the difference drives the taxable amount [1][2].
Companies are outside the new rules [1][2]. A UK company lending or pooling tokens remains under current corporation tax principles and HMRC's existing beneficial ownership analysis [4]. Groups with both corporate and individual holders will need two treatments for the same on-chain activity.
Status and what happens next
This is draft legislation for Finance Bill 2026-27. HMRC's technical consultation on the draft closed on 7 September 2026, and final content depends on decisions by the Chancellor [3]. The Budget is scheduled for 28 October 2026 [5]. As of 16 October 2026 we found no sign the Finance Bill had been introduced to Parliament, so the wording could still change before it becomes law.
What to do
- Keep applying HMRC's current guidance to positions opened before 6 April 2027; nothing is law yet [4].
- For individual and trustee clients, start recording per-position token counts by type in and out, with sterling values at each step.
- Do not apply the deferral to companies; it is drafted for persons other than companies [2].
- Check whether each protocol you use would meet the low risk of loss and widely available conditions, and note where it is unclear.
- Re-read the clauses when the Finance Bill is published after the 28 October Budget, and confirm treatment with a UK tax adviser.
Sources
- Tax treatment of Cryptoasset Loans and Liquidity Pools (HM Revenue & Customs)
- Cryptoasset loans and liquidity pools: draft legislation (accessible version) (HM Revenue & Customs)
- Finance Bill 2026-27 — draft legislation and technical tax documents (HM Revenue & Customs)
- CRYPTO61620 - Decentralised Finance: Lending and staking: Chargeable Gains: Making a DeFi loan (HM Revenue & Customs)
- Budget to move “power and money out of Westminster, and into every postcode around Britain” (HM Treasury)
General information for finance teams, current as of publication. Not legal, tax or accounting advice.