The UK government has published draft tax rules covering crypto lending, liquidity pools, stablecoins, and HMRC information powers. The lending and stablecoin measures would take effect from April 2027. The information-power reforms would begin after Royal Assent.
The measures are not yet law. The government opened an eight-week technical consultation on July 13, 2026. It would close on September 7, 2026, before the legislation is introduced in Parliament.
The main proposal changes how individuals and trustees are taxed on qualifying crypto loans and liquidity pools. Some transfers would use a no gain, no loss basis. Capital Gains Tax would then be delayed until an economic disposal occurs.
Under current HMRC guidance, transferring beneficial ownership of tokens to a borrower or DeFi platform creates a disposal. This could produce a tax charge even when the investor has not sold the assets for cash. However, the result depends on the terms of each arrangement.
The draft rules aim to align the tax treatment more closely with the economic substance of these transactions. They would not exempt later gains from tax.
HMRC estimates that around 700,000 individuals could be affected. The measure would take effect on April 6, 2027. It would apply to individuals and trustees, but not companies.
The first category covers single cryptoasset lending arrangements. An investor transfers qualifying tokens and receives a right to recover the same type of asset. The arrangement may also provide a return.
A qualifying acquisition or disposal of an interest could receive no gain, no loss treatment. The rule would apply when the returned crypto is the same type as the original asset. Other disposals may remain taxable.
The second category covers single cryptoasset borrowing arrangements. Borrowed tokens would be acquired at market value when borrowing begins. Returning the same type of token would use that original value for the disposal calculation.
Collateral supplied under a qualifying borrowing arrangement would be ignored for Capital Gains Tax. This would reduce separate calculations caused only by collateral movements.
The third category covers automated market-making arrangements operated through smart contracts. An individual or trustee must hold an interest that includes rights to at least two types of qualifying cryptoassets.
A separate measure would change the treatment of eligible stablecoins. Individuals and trustees would receive a Capital Gains Tax exemption on disposals. Certain interest-like returns would instead count as savings income.
The exemption would include eligible non-sterling stablecoins. However, the government has not issued a final list of qualifying tokens. HMRC plans to publish guidance on the largest stablecoins in use.
An eligible token would need sufficient currency or other assets to support a stable value against sterling or another currency. It must be designed for payment or settlement. It must also be widely available and actively traded.
Bitcoin and other cryptocurrencies would not receive this exemption. The government said they are not comparable with stable-value assets. Existing tax rules would continue to cover those crypto disposals.
A holder would not pay Capital Gains Tax on a qualifying disposal of an eligible stablecoin. However, any loss from that exempt disposal would not normally qualify as an allowable capital loss.
For companies, eligible stablecoins would enter the loan relationship rules. They would be treated as money debts for Corporation Tax. Lending an eligible stablecoin would also be treated as lending money.
The Finance Bill package would also expand HMRC information powers. Financial Institution Notices would extend to cryptoasset service providers. Payment service providers facilitating payments connected with those services would also enter the scope.
A notice may require records needed to check a known taxpayer or collect a tax debt. The reform would not create an unrestricted power. Existing legal tests and safeguards would continue.
The bill would also update rules for digital records. HMRC could request relevant information held in software, automated systems, or cloud services. It must already have a lawful basis for the request.
The new powers would operate alongside the UK Cryptoasset Reporting Framework. In-scope service providers have been required to collect specified user and transaction data since January 1, 2026.
In-scope providers would file their first reports between January 1 and May 31, 2027. They are required to collect details from all users but report those who are tax residents of the UK or another reportable CARF jurisdiction.
The bill could prevent immediate tax charges before an economic disposal occurs. Tax may still arise when an investor later sells or exchanges the assets. Wider information powers would also increase HMRC oversight of the UK crypto market.
