New rules are to be introduced by HMRC to apply ‘no gain, no loss’ tax treatment to certain crypto disposals involving cryptoasset loans and liquidity pools.
At present, cryptocurrencies are treated as an investment asset for capital gains tax purposes, with selling, swapping or spending resulting in a disposal.
Under new rules which will take effect from 6 April 2027, depositing crypto into interest protocols, liquidity pools or collateral will no longer result in a disposal for capital gains tax purposes. The transactions will instead be tax neutral, intended by HMRC to remove disproportionate administrative burdens for taxpayers.
Capital gains tax will therefore only apply to transactions that result in economic disposal, for example selling, swapping or withdrawing excess assets.
The treatment of interest, mining rewards, staking yields and airdrops arising from cyrptoassets remain unchanged – these will be treated as miscellaneous income for UK tax purposes, subject to income tax in the year that they are received.
Although these changes seek to make the tax treatment easier to understand for taxpayers, the rules can still be complex. Furthermore, as a result of the new Crypto-Asset Reporting Framework (CARF), Crypto platforms will be required to share taxpayer details with tax authorities meaning HMRC are likely to have substantially better access to Crypto information by 2027. It is important therefore to ensure that all transactions are reported correctly.
👉 If you require any assistance with reviewing and reporting your crypto transactions please get in touch with your usual TAP contact or contact us to arrange a chat with one of our colleagues.
