By Anshul — July 16, 2026
The UK government has proposed a change to how certain crypto lending and decentralised finance (DeFi) transactions are taxed, aiming to prevent investors from being treated as having made a taxable disposal simply by moving assets into qualifying lending arrangements or liquidity pools.
HM Revenue & Customs (HMRC) says eligible cryptoasset loans and liquidity pool transactions would receive “No Gain, No Loss” (NGNL) treatment for Capital Gains Tax (CGT) purposes. Under NGNL, the act of depositing crypto into those specific arrangements would not trigger an immediate CGT event; any gain or loss would be deferred until the asset is sold or otherwise disposed of in an economically meaningful transaction.
Why the change? HMRC notes that current rules can create uncertainty because some transfers into lending protocols or liquidity pools have been treated as disposals, even though investors often retain exposure to the underlying asset. The proposed measure is intended to align tax treatment with the economic reality of these arrangements and to simplify compliance and reporting for taxpayers.
Who would benefit? The proposal is aimed at individuals and trustees participating in qualifying crypto lending and liquidity pool arrangements. It is not a blanket rule for all crypto activity: relief would apply only where transactions meet the qualifying conditions set out in the draft legislation.
What NGNL means in practice NGNL does not eliminate CGT obligations. Instead, it postpones recognition of a capital gain or loss until the cryptoasset is ultimately disposed of in a transaction that changes the investor’s economic exposure. The deferred gain or loss will then be calculated and taxed under the usual CGT rules.
Next steps HMRC has published draft legislation and is seeking technical feedback before finalising the rules. Subject to the legislative process, the government proposes the changes take effect from April 6, 2027. The proposal is part of broader efforts to clarify how cryptoassets and DeFi activities should be taxed in the UK.
First published: July 16, 2026