UK Crypto Tax Deferral
UK Rolls Out 'No Gain, No Loss' Crypto Tax Policy, Deferring Capital Gains Until 2027
Anonymous
Key Points
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Under the NGNL regime, when you take out a crypto loan, you are treated as acquiring the borrowed coins at market value, and any collateral posted is disregarded for capital gains tax purposes, deferring CGT until a disposal occurs.
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In automated market making arrangements (liquidity pools), NGNL applies as long as withdrawals equal the original deposit; gains or losses are triggered immediately if withdrawals are more or less than what was deposited.
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Aave founder Stani Kulechov called the UK policy the 'right direction' and cited two reasons: it shows the industry can influence outcomes, and more DeFi-focused regulation indicates meaningful progress; he emphasized industry feedback helped avoid overly complicated options.
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The NGNL change amends the Taxation of Chargeable Gains Act 1992 and takes effect from April 6, 2027, forming part of a broader UK move toward clearer crypto regulation and reporting obligations, including new exchange reporting rules introduced in January 2026.
The UK government will stop taxing crypto loans and liquidity pool deposits as immediate sales starting April 6, 2027. Under a new "no gain, no loss" (NGNL) rule, capital gains tax is deferred until a real disposal occurs, according to CoinTelegraph.
The change is expected to affect about 700,000 UK-based crypto holders. TradingView reported that HMRC's shift aims to match tax rules with the real economics of DeFi — where lending and pooling assets is not meant to be a taxable sale.
How the No Gain No Loss Rule Actually Works
Under the old rules, putting crypto into a loan or liquidity pool counted as a disposal. That triggered capital gains tax — even if you got the same coins back later. The new NGNL regime changes that. When you take out a crypto loan, your collateral is ignored for tax purposes. The borrowed coins are treated as acquired at market value. No tax hits until you actually sell, according to Head Topics.
Liquidity pools work slightly differently. NGNL applies only if you withdraw exactly what you put in. If you pull out more or less than your original deposit, a gain or loss is triggered right away. Blaze Trends noted the rules are part of the Finance Bill 2026-27, which also aligns the UK with OECD Global Forum standards.
Aave Founder Praises UK's DeFi-Friendly Stance
Stani Kulechov, founder of the DeFi lending platform Aave, called the UK policy "the right direction." He cited two reasons for his praise. First, it proves that the crypto industry can actually shape policy outcomes. Second, DeFi-focused regulation signals that meaningful progress is happening.
Kulechov also said that industry feedback helped steer officials away from more complicated options. CoinTelegraph reported his comments, noting that the NGNL approach reflects direct stakeholder input — a rare win for the DeFi community in a major Western market.
A Shift Away From the 1992 Capital Gains Law
The NGNL change formally amends the Taxation of Chargeable Gains Act 1992. That law was written long before digital assets existed. Under it, any transfer of a crypto asset — even a temporary one — could count as a taxable disposal. UK capital gains tax on crypto currently runs between 18% and 24%, according to Head Topics Canada.
The NGNL rule is part of a broader UK push toward clearer crypto regulation. New exchange reporting rules are also coming into force in January 2026. Together, these moves mark a shift from reactive enforcement to a structured framework for digital assets.
What This Means for UK Crypto Investment Activity
By deferring tax, the UK removes a major friction point for DeFi users. Investors who previously avoided lending or pooling crypto — to dodge an immediate tax bill — may now engage more freely. TradingView noted that the policy targets the economic reality of these arrangements, not just their legal form.
Market observers will watch whether the deferral boosts DeFi activity in the UK. It could also pressure other countries to follow suit. The UK is now one of the first major economies to formally carve out DeFi lending from standard capital gains rules — a move that sets a precedent others may study closely.
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