HMRC has published draft legislation for three significant cryptoasset tax measures as part of the Government’s 2026 Legislation Day, collectively the most substantial package of cryptoasset tax reform the UK has seen.
This matters to us, because it’s been a long time coming and we’ve been part of the journey since 2022, having been heavily involved with the DeFi consultations and conversations along the way pushing for a fairer tax outcome. Laura has co-chaired the CryptoUK Tax Working Group, the UK’s leading trade association for crypto and digital assets, part of Chartered Institute of Tax (CIOT) responses through digital assets working group and separately been part of a consortium responses with Recap, Wright Vigar, Cryptax, Andersen and Myna L2. As part of all of these, Laura has attended HMRC round tables contributing technical feedback, practical examples from real client casework and detailed responses to HMRC’s consultations, consistently arguing for a tax framework that reflects the economic substance of cryptoasset activity rather than forcing it through rules written for other assets.
The eligible stablecoins being treated as money reduces administration for some and increases it for others, so it wasn’t going to be a blanket easy answer from a practical tax compliance perspective where we are relying heavily on tax software. There is also the interaction with DeFi and the returns of eligible stablecoins and whether it is interest like or not as they are taxed under two different tax provisions.
The information powers may not be a specific tax change but will significantly impact what information HMRC can request using their usual schedule 36 powers. This isn’t a small update, it means email addresses of taxpayers using platforms and any other identifying information being shared about taxpayers’ cryptoassets and connecting that to personal information on that taxpayer from all different platforms and providers, which opens up a significant security risk, unlike with securities and banking and one that we will be reviewing and feeding back on.
The draft legislation covers three areas:
Cryptoasset loans and liquidity pools — new Capital Gains Tax rules for crypto lending, borrowing and liquidity pool arrangements, replacing the current beneficial ownership analysis in these cases. Depositing tokens into a lending arrangement or liquidity pool would no longer trigger a disposal on the way in, one of the most common and least intuitive traps in DeFi taxation today.
Taxation of stablecoins — eligible fiat-backed stablecoins would be treated more like money for tax purposes, including an exemption from Capital Gains Tax on disposals by individuals. For anyone with heavy stablecoin activity, this removes thousands of tiny FX-driven taxable events from their computations. There is also an additional change which requires interest like returns on eligible stablecoins to be treated as savings income and this will have wider ramifications from a practical perspective.
Reforming information powers — changes to HMRC’s civil information and inspection powers, which bring certain cryptoasset service providers within the Financial Institution Notice regime. We have concerns over these announcements from a security and overreach perspective, including compelling platforms to provide information to HMRC that users may not be able to get as part of their own compliance filings. It will be important to properly review the measures and impacts across all stakeholders and feedback as part of the consultation process so the outcome is balanced and proportionate.
The draft legislation is open for an eight-week technical consultation, with the measures expected to be included in Finance Bill 2026–27 and to take effect from April 2027. The detail matters enormously here: transitional rules, eligibility definitions and how this practically works for UK taxpayers and advisers/accountants trying to correctly calculate the tax positions.
Find the drafts here:
Cryptoasset loans and liquidity pools
Reforming information powers and modernising computer records law
If you’d like to understand how the proposed rules may affect your own position, particularly if you hold significant stablecoin balances or participate in DeFi lending or liquidity pools, get in touch.
Disclaimer: This article is for general information only and does not constitute tax advice. UK tax treatment depends on your individual circumstances and may change over time. You should seek professional advice before taking any action. Knightbridge Tax Ltd accepts no liability for any reliance placed on this content.