by Coinstrooper Crypto Articles
Quick Take
  • The UK’s latest Budget leaves headline crypto tax rules unchanged but tightens the wider environment for traders.
  • Meanwhile, HMRC signals a major rethink on how it taxes DeFi lending and liquidity provision.
  • Chancellor Rachel Reeves did not introduce any crypto-specific tax in the 2025 Budget.
  • There is no new levy on trading, holding, or spending digital assets.

What Happened

Chancellor Rachel Reeves did not introduce any crypto-specific tax in the 2025 Budget. There is no new levy on trading, holding, or spending digital assets.

Market Context

Meanwhile, HMRC signals a major rethink on how it taxes DeFi lending and liquidity provision.

The capital gains tax (CGT) allowance remains very low compared to historic levels. That means more crypto disposals trigger reportable gains, even for modest retail portfolios.

Alongside the Budget, HMRC published a consultation outcome on DeFi lending and staking. It responds to strong criticism of its 2022 guidance on loans and liquidity pools.

Crucially, the department accepts that automated market makers represent a major share of activity. It signals that any new rules should explicitly cover Uniswap-style multi-token liquidity pools.

Proposed NGNL Rules for DeFi Loans and Liquidity Pools

HMRC now outlines a potential NGNL approach for three areas. These are single-token arrangements, crypto borrowing, and automated market makers.

One of the most controversial ideas was to treat all DeFi rewards as income. Respondents warned that this would ignore capital versus revenue distinctions and create dry tax charges.

Why It Matters

For single-token lending, entering and exiting a platform could be NGNL for CGT. The real gain or loss would arise only when the user finally sells the token.

Details

The UK’s latest Budget leaves headline crypto tax rules unchanged but tightens the wider environment for traders.

No New “Crypto Tax,” But Pressure Still Rises

However, the Budget extends income-tax threshold freezes for three more years. As wages rise, more taxpayers drift into higher bands, including active crypto traders.

At the same time, the UK is pushing ahead with global data-sharing under new reporting standards.

Exchanges and platforms will supply more detailed customer information to HMRC from 2026.

HMRC Backs Away From Its Hard Line on DeFi

Stakeholders told HMRC that current rules create disproportionate administrative burdens. They warned that treating every DeFi move as a disposal bears little relation to economic reality.

In response, HMRC has dropped its earlier idea of copying repo and stock lending rules. It now prefers a framework based on “no gain, no loss” (NGNL) for many DeFi flows.

For borrowing, posting collateral and taking out tokens would be ignored for CGT. Selling borrowed tokens and later buying them back to repay would crystallise the gain or loss.

For AMMs, HMRC proposes NGNL treatment when users deposit tokens for LP positions. Tax would then focus on differences in the number of tokens received when they exit.

If users receive more of a token than they originally deposited, the extra counts as a gain. But if they receive fewer, the shortfall is treated as a loss against their tax base.

HMRC stresses that this is still a “potential approach,” not enacted law. It will continue consultations before deciding whether to legislate.

DeFi Rewards: No New “All Income” Rule – For Now

HMRC now says it is not actively pursuing an “all revenue” deeming rule. Rewards will continue to follow existing principles for now.

What This Means for UK Crypto Traders