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The latest UK Budget does not change the main tax rules for cryptocurrencies, but tightens the wider environment for traders.
At the same time, HMRC is signaling a major rethink of the way DeFi loans and the provision of liquidity are taxed.
There is no new crypto tax, but the pressure is still growing
Minister Rachel Reeves did not provide Specific fee for digital currencies In the Budget 2025. There is no new tax on trading, holding, or spending digital assets.
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In any case, it was stretched Budget Freeze the income tax threshold for another three years. As salaries increase, more taxpayers drift to higher teams, including active cryptocurrency traders.
Capital gains tax (CGT) provisions remain very low compared to historical levels. This means that more cryptocurrency dispositions trigger reported gains, even for modest individual wallets.
At the same time, The UK continues to move forward Global data exchange under new reporting standards.
Exchanges and platforms will provide more detailed customer information to HMRC by 2026.
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HMRC pulls back from tough stance on decentralized finance (DeFi)
In addition to the budget, published HMRC as a result of a consultation on DeFi Lending and Staking. It responds to strong guidance on its 2022 guidance on loans and liquidity pools.
Stakeholders have told HMRC that the current rules create a disproportionate administrative burden. They warn that the treatment of any DeFi movement as a provision does not fit with the economic reality.
In response, HMRC abandoned its previous idea of copying the recovery and loan sharing rules. He now favors a “no gain, no loss” (NGNL) based framework for many DeFi movements.
Essentially, the Authority recognizes that automatic market makers account for a significant part of the activity. It suggests that any new rules should explicitly cover multiple Uniswap-style liquidity pools.
NGNL Proposes Rules for DeFi Lending and Liquidity Pools
HMRC now outlines a potential approach to NGNL for three areas. These are single token arrangements, digital currency lending, andAutomated market makers.
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Entry and exit from the platform in the case of a single token loan represents NGNL for CGT. The real profit or loss is achieved only when the user finally sells the token.
If the security provision is neglected and the tokens are taken in case of loan for CGT. Selling the borrowed tokens and later buying them back for repayment will make a profit or loss.
HMRC offers NGNL treatment for automated market makers when users deposit tokens to acquire LP positions. The rates then focus on the differences in the number of tokens that a user receives at their checkout.
If users receive more tokens than they initially deposited, the surplus is counted as profit. But if they receive less, the shortfall is considered a loss against their tax base.
HMRC insists that this remains a “potential approach”, and not the applicable law. It will continue to consult before deciding on legislation.
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DeFi Rewards: There is no new “all revenue” rule – for now
One of the most controversial ideas was to consider all the bonuses DeFi As income. Respondents warned that this ignores the distinction between capital and income and creates dry taxation.
HMRC now says it is not actively seeking to enforce the “all income” rule. Awards will continue to follow current principles for the time being.
What this means for UK cryptocurrency traders
For spot traders on centralized exchanges, budgeting does not lead to direct structural changes. CGT still applies to any disposal, and income tax applies when the trade is a trade.
However, freezing thresholds and lower CGT allowances increase the effective tax burden.
More active traders exceed reporting limits and face higher marginal taxes on profits. HMRC expects more users to use portfolio tracking software to support their files.
