The UK government is preparing a new tax framework that would treat many decentralized finance lending and liquidity transactions on a “no gain, no loss” basis, deferring capital gains tax until there is a real economic disposal. In a consultation outcome published on Nov. 26, 2025, HM Revenue & Customs said it is developing rules so that certain cryptoasset loans and liquidity pool arrangements are taxed only when tokens are genuinely disposed of, rather than each time they move in and out of a protocol. Earlier guidance had drawn criticism because users could face capital gains charges simply for depositing tokens into DeFi protocols and later withdrawing them, even when they received back the same assets. HMRC now says it is working on an approach that treats those “disposals” as no gain, no loss, and confirms this model could extend to automated market makers as well as more traditional loan setups. Under the outline described in the consultation documents, single-token deposits, crypto loans and multi-token liquidity pools would all fall under the framework. Tax would be calculated when a user actually sells or economically disposes of the tokens, rather than at each technical transfer. Aave CEO Calls Outcome A Win For DeFi Borrowers Aave founder and CEO Stani Kulechov highlighted the change after HMRC released the consultation summary. In a post on X, he said that when users deposit assets into Aave, the deposit itself would not be treated as a disposal for capital gains purposes, creating a no-gain-no-loss treatment at the point of deposit. He described the conclusion as a major win for UK DeFi users who want to borrow stablecoins against their crypto collateral, arguing that borrowers are not trying to dispose of their assets when they lock tokens for liquidity. Kulechov also said Aave Labs took part in the consultation to push for rules that better match the economic reality of protocol use. HMRC’s document confirms it engaged widely with industry and that respondents strongly favored moving away from a repo-style model toward a no-gain-no-loss principle. Officials say they will continue to assess the case for legislative change and build the new approach for individuals first, before considering whether to extend it to companies. CARF Extension Brings Full UK User Reporting From 2026 At the same time, the government is tightening reporting rules for crypto platforms. A separate policy paper on the Cryptoasset Reporting Framework, published on Nov. 26, requires UK reporting cryptoasset service providers to collect and report data on UK-resident customers from Jan. 1, 2026. The CARF, developed at the OECD level, already underpins cross-border exchanges of crypto transaction data between tax authorities. The UK’s new measure extends that system so HMRC receives standardized, structured data on all UK taxpayers using both domestic and overseas platforms, including full identity details and transaction history. Secondary legislation made in June 2025 brings the domestic CARF rules into force at the start of 2026, with first international data exchanges scheduled for 2027. HMRC says the goal is to tackle evasion and support compliance without changing the underlying tax obligations themselves. If adopted, the combination of deferred capital gains on DeFi loans and liquidity pools and expanded CARF reporting from 2026 would reshape how UK users interact with lending protocols and exchanges: tax would move closer to economic disposals, while HMRC’s visibility into on-chain and platform activity would increase sharply.
