The UK Budget measures announced on 26 November 2025 introduce two crypto-related policies: the tax reporting of cryptoassets and the taxation of decentralised finance (DeFi) involving lending and staking cryptoassets. One issue is how HMRC can best gather cryptoasset data to tackle tax evasion, while another focuses on ensuring the tax code fairly reflects cryptoasset activity. The government confirms that UK reporting Cryptoasset Service Providers (RCASPs) will be required to collect and report information to HMRC relating to their UK resident customers under the Cryptoasset Reporting Framework (CARF) as developed by the Organisation for Economic Co-operation and Development. The proposed legislation mandates information reporting from cryptoasset users who are resident in the UK, or have controlling persons who are resident in the UK. HMRC states that combining existing CARF reporting with the new legislation aims to obtain CARF data on all UK taxpayers using both UK-based and non-UK-based RCASPs, with standardised data collection on an annual basis.
The government notes that the 2025 Summary of Responses does not yet provide a final decision on the taxation of DeFi lending and staking transactions. It also signals that the most likely legislative path may treat certain cryptoasset arrangements—where individuals engage in DeFi lending and staking—as no gain, no loss, removing a potential tax liability under current rules. HMRC’s approach would define cryptoassets as a digital representation of value secured by a distributed ledger, and would cover a range of arrangements, including single-token setups and DeFi schemes. Under the proposal, situations where tokens are lent and returned would generally not trigger tax until an economic disposal occurs, with taxation applying based on whether the net disposition results in a gain or loss.
Additional provisions could address cryptoasset borrowing, collateral arrangements, and multi-token AMMs, where gains and losses may arise without immediate disposals. Where assets are transferred into an AMM, the tokens would be treated as disposed of on a no gain, no loss basis, and taxation would reflect the outcome when the rights are disposed. The government continues to refine these approaches through stakeholder engagement, and no precise timetable for final legislation has been provided.
Leave a Reply