Crypto lending and liquidity pools: the 2027 tax rules

tax-newshmrcguides
Has effect from
6 Apr 2027
Consultation closes
7 Sep 2026
People affected
~700,000
Status
Draft

On 13 July 2026 HMRC published draft rules that change how Capital Gains Tax works when you lend crypto or put it into a liquidity pool. Today, moving a token into one of these arrangements can count as a disposal, because you hand over beneficial ownership of the coin. That means you can trigger a tax charge without ever cashing out. From 6 April 2027 that stops for qualifying arrangements: the move in and out is treated as “no gain, no loss”, and the tax is deferred until you actually dispose of the underlying crypto. It is still draft law — an eight-week technical consultation runs until 7 September 2026 — so the detail can shift before it takes effect.

What no gain, no loss means

A no-gain-no-loss disposal is a disposal on paper only. Your proceeds are deemed to equal your cost, so the gain is exactly zero, and your original cost basis carries over to whatever you receive. Nothing is taxed at the point you enter the arrangement; the charge simply waits until a real economic disposal later. HMRC already uses this treatment elsewhere — transfers between spouses and gifts to charity both work this way. The 2027 measure extends the same idea to three crypto situations.

The three arrangements

Lending. When you lend a token and have an unconditional right to get an equivalent token back, putting it out on loan and getting it back are both no gain, no loss. Your original buy and your eventual sale still count as normal disposals — only the lending leg is deferred.

Borrowing. If you borrow crypto, you are treated as acquiring it at market value when you receive it, and as disposing of the returned tokens at that value. Collateral you post is generally ignored for CGT, unless it turns out it will not come back — at which point it is treated as a disposal at market value.

Liquidity pools. Depositing into an automated market maker in exchange for the same type of token is no gain, no loss. On the way out, that treatment holds only to the extent you get back the quantity you put in. Any difference in quantity is a real gain or loss, worked out separately.

The liquidity pool quantity trap

The pool rule is the one that catches people. You do not just walk away untaxed — you are taxed on the change in how many tokens you hold. Say you withdraw part of your position and get back less ETH but more USDC than the share you deposited. You net the two legs at their current value:

Token leg on exitQuantity vs depositValue of the differenceCGT result
ETH0.3 less£900£900 loss
USDC1,500 more£2,100£2,100 gain
Net——£1,200 gain

Here the shortfall in ETH is a £900 loss and the extra USDC is a £2,100 gain, so you have a £1,200 net gain to report even though you never sold anything for cash. The deposit itself was tax-free; the imbalance on exit is not. You will need records of what went in and what came out, per token, to work this out — the pool will not do it for you.

This does not apply yet

The rules have effect from 6 April 2027 and they are not retrospective. Your 2024-25, 2025-26 and 2026-27 returns still follow the current position: entering a lending or pool arrangement can be a disposal because beneficial ownership changes, and a crypto-to-crypto swap is a disposal valued in GBP at the time of the trade. If you are filing now, nothing here changes your figures. What changes is how a deposit or a loan will be treated once the new tax year begins.

What to do now

Use the calculator today for the returns you owe today. Upload your trade history and our calculator applies the current HMRC matching rules to crypto the same way it does to shares — Same Day, the 30-day Bed and Breakfast rule and the Section 104 pool — and hands you a per-disposal breakdown split by tax year. That is what your 2024-25 through 2026-27 crypto returns need.

You will not have to relearn anything for 2027. When the no-gain-no-loss rules take effect on 6 April 2027, we will update the engine to apply them for you — deposits and loans deferred, pool exits taxed on the quantity difference — and it will pick the right treatment based on the date of each transaction. You keep using it the same way; the numbers just follow whichever rules were in force at the time. For the mechanics of crypto pooling and swaps, see how UK crypto CGT calculations work.

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