HMRC has published its consultation outcome in the UK regarding the taxation of DeFi activities related to lending and staking.

A particularly interesting conclusion is that when users deposit assets into Aave, the deposit itself is not treated as a disposal for capital gains…

— Stani.eth (@StaniKulechov) November 27, 2025

1. Executive summary

Cryptoassets, and the technology underpinning them, have developed rapidly over recent years and are now used in a wider range of transactions. New forms of cryptoassets, and services that support their usage, continue to evolve at pace and are becoming more complex. The increase in the use of smart contracts to facilitate automatic transactions has increased the number of transactions and the complexity of the arrangements of individuals who use them.

The then government published a Call for Evidence in summer 2022 seeking data and views on the different potential options for the taxation of cryptoasset loans and liquidity pools. This was then followed by a consultation from 27 April 2023 to 22 June 2023 on proposals to align the tax treatment of certain cryptoasset transactions more closely with their economic substance.

32 formal written responses to the consultation were received from a wide range of stakeholders, including individuals, businesses, tax professionals and representative bodies. In addition, written responses to the consultation were supplemented by further engagement with stakeholders, through a series of roundtables and multilateral discussions.

Stakeholders unanimously supported HMRC looking at this issue. The key themes were that stakeholders wanted something that, compared to the current rules, would make compliance more straightforward and better reflect the economic reality of the transactions. They also noted the need for any rules to be flexible enough to adapt to new arrangements that could emerge, and be wide enough to cover the main areas of the market. Some stakeholders raised concerns as to how HMRC was proposing to address the issue, and suggestions were made as to how the detailed design of the rules could be improved.

Following the consultation, HMRC has continued to have constructive, informal engagement with advisers and industry on how the design could be improved. As a result, HMRC has been working to develop a potential approach where certain disposals are treated as ‘no gain, no loss’ (NGNL), and which could be extended to include automated market makers. Further details on what this approach might look like are set out in Section 4 below. This informal engagement remains ongoing.

The government will continue to assess the merits of this potential approach, and the case for making legislative change to the rules governing the taxation of cryptoasset loans and liquidity pools.

The government wishes to thank all respondents and other interested parties for their constructive and continued engagement and valuable contributions. This document summarises the responses received to the consultation. It also provides details on the government’s responses to the views put forward.

Read the full paper here 

Source: HMRC