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The latest UK budget leaves the basic rules for cryptocurrency taxation unchanged, but complicates matters for traders. At the same time, the HM Revenue and Customs Commission (HMRC) is signaling a major review of the tax regime for decentralized finance (DeFi), including lending and liquidity provision.
No Taxes, but Pressure Mounts
Chancellor of the Exchequer Rachel Reeves did not introduce separate levies for digital assets in the 2025 Budget. The document does not envisage new taxes on trading, owning, or using cryptocurrencies. However, the indirect burden on investors will continue to grow.
The government has extended the freeze on income tax thresholds for another three years. This means that as nominal salaries rise, more and more citizens are falling into higher-rate brackets. This situation also affects active traders, whose income from transactions is added to their main profits, which can lead to significant tax liabilities.
The capital gains tax (CGT) deductible limit remains at a historically low level. As a result, even small gains from asset sales will require declaration. At the same time, the UK is implementing global data exchange standards, and from 2026, exchanges will begin reporting detailed customer information to HMRC, increasing oversight of traders' tax liabilities.
Revising the Approach to Decentralized Finance
The Tax Office has published the results of a consultation on lending and staking in the DeFi sector. The regulator responded to criticism that arose after the publication of guidance in 2022, which treated any transfer of tokens to a smart contract as a sale.
Market participants pointed out that such rules are inconsistent with economic reality. The current regime creates an excessive administrative burden on users, which could discourage investors from participating in DeFi. In response, HMRC abandoned the idea of copying the regulations applied to the securities market.
The agency proposes implementing a "no gain, no loss" (NGNL) concept. This new approach will take into account the specifics of automated processes in DeFi, reducing the tax burden on users and simplifying the tax declaration process.
In Conclusion
Thus, the UK tax reform leaves the fundamental rules for cryptocurrency taxation unchanged, but introduces new challenges for traders. At the same time, a revised approach to DeFi taxation could be a step in the right direction, creating a fairer and more understandable system for market participants. It is important to monitor further changes and adapt to new conditions to minimize tax risks and manage your assets as effectively as possible.
