The UK is taking a fresh look at how it handles DeFi tax. The government wants to shift toward something far more practical, rather than treating every DeFi move as a taxable event.
This new approach to DeFi tax aligns with how crypto actually works in real time. For many users, it could remove a lot of confusion and unnecessary tax stress.
What the UK Is Proposing
The big idea on the table is a “no gain, no loss” rule for DeFi activity. In case you lend your crypto to a lending service or liquidity provider, you would not immediately cause a capital gains tax to take place. Rather, this tax would apply only when you sell the underlying tokens.
🚨UK TARGETS DEFI WITH NEW TAX RULE
The UK has proposed a new ‘No Gain, No Loss’ tax framework for DeFi, and the path toward tighter regulation and greater tax transparency is already well underway. pic.twitter.com/kMaC7hKJFn
— Coin Bureau (@coinbureau) November 27, 2025
Currently, you’ll get taxed for simply moving tokens into a protocol, regardless of purpose. That feels unfair, especially since it’s not a real profit. UK capital gains tax rates can range from 18% to 32%, so the current system can hit users with a bill even when there’s no meaningful gain yet. Under the proposed change, DeFi users would only calculate gains or losses when they redeem their liquidity tokens. The tax would depend on how many tokens you get back compared to what you first put in.
Why the Industry Is Happy About It
Crypto users are already calling this a major improvement. Sian Morton from Relay Protocol said the no-gain, no-loss method is a “meaningful step forward” for anyone borrowing stablecoins against crypto collateral. She also called it a positive sign for the UK’s regulatory approach.
HMRC has published the outcome of its UK consultation on the taxation of DeFi lending and staking.
One of the key takeaways: depositing assets into protocols like Aave is not treated as a taxable disposal for capital gains. Instead it falls under a “no gain, no loss” approach.…
— Sian Morton (@Sian_Morton) November 27, 2025
Maria Riivari, a lawyer at Aave, said the proposal would finally make it clear that DeFi activity doesn’t trigger tax until you actually sell tokens, not just move them around. Aave’s CEO, Stani Kulechov, called it a big win for DeFi users in the UK.
This is a notable positive development for DeFi in the UK. The HMRC is considering new rules: the goal is to make tax simpler and closer to the real economic outcomes of DeFi lending.
This would bring clarity that DeFi transactions do not trigger tax until you truly sell your… https://t.co/QExIIREho6
— Maria Riivari (@MariaRiivari) November 27, 2025
Still a Proposal, Not Final Yet
HMRC says it’s still gathering feedback and wants to ensure any updated DeFi tax rules apply to all types of transactions. Binance, a16z, and Crypto UK were among the 32 parties that submitted formal feedback during the consultation.
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
Conclusion
If the UK goes ahead with this change, it could set a new global standard for DeFi tax rules. This tax rule is also more understandable, rational, and closer to the way decentralized finance operates. At the moment, it remains a debated topic, but it is already a strong sign that the UK is listening to what DeFi users need.
Disclaimer
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The post UK Plans Defi Tax Relief With No-Gain, No-Loss Rule appeared first on Altcoin Buzz.
This articles is written by : Nermeen Nabil Khear Abdelmalak
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