New Tax Deferral for UK Crypto Transactions

The United Kingdom’s tax agency is set to revise its treatment of specific cryptocurrency disposals, introducing a policy that will postpone the country's capital gains requirements for transactions involving lending and liquidity pools.

HM Revenue and Customs (HMRC) made a Monday announcement detailing its plan to adopt a “no gain, no loss” approach for these disposals, with the change scheduled to take effect on April 6, 2027. According to the tax authority, this measure will defer the capital gains tax liability on digital assets until the point of "an economic disposal."

“This measure will support fairness in the tax system,” the UK tax authority stated. “It aligns the tax treatment more closely with the economics of these arrangements by ensuring that gains and losses are generally recognized only when the participant makes an economic disposal of the cryptoassets.”

This new policy is expected to affect approximately 700,000 individuals and trustees. It signifies a major shift from the authority’s 2022 guidance, which was issued following a consultation period on crypto liquidity pools and lending. Under current UK law for the 2025-26 tax year, taxpayers face capital gains rates between 18% and 24% on crypto transactions, with the specific rate determined by whether they are a basic-rate or higher-rate taxpayer.

HMRC specified that crypto transactions will be treated as “no gain, no loss” under UK capital gains laws in several scenarios. These include the acquisition or disposal of an interest in a lending arrangement in return for the same type of asset, the acquisition of borrowed assets at market value, and similar conditions involving automated market makers.

The change was met with positive feedback from the industry. In a Monday X post, Aave founder and CEO Stani Kulechov commented, “This is the right direction, mainly driven by the industry feedback demonstrating that any other approach would cause significant admin burden for the tax payer.”

Political Update: Farage Faces By-Election Challenges

In a separate development in UK politics, Reform leader Nigel Farage will face competition in an upcoming by-election that his own resignation triggered last week. This comes amid reports that the politician has accepted contributions from billionaires with connections to the cryptocurrency industry.

Stephen Newnham, the leader of the Solana community group Superteam UK, announced on Tuesday that he will run as an independent candidate against Farage and other contenders. The by-election for the Clacton constituency is set for August 13. The field of candidates will also feature comedian and author Jon Harvey, who is running in costume as Count Binface, a character described as an “independent space warrior” who wears a trash bin-shaped helmet.

Farage initiated the by-election through his resignation, stating that he wished for the people of Clacton to pass judgment on his actions. The Reform figure reportedly obtained a $6.7 million donation from crypto billionaire Christopher Harborne, which he initially called a ”reward” for the UK's departure from the European Union before later terming it a “gift.” He has also received other financial support from George Cottrell, a convicted fraudster who has been linked to a crypto casino.