The taxation of decentralised finance involving the lending and staking of cryptoassets
Consultation description
The government is committed to retain the UK’s global leadership position in fintech. Last April it announced its intention to explore and resolve specific issues regarding the taxation of the decentralised finance (DeFi) activities of lending and staking. Some stakeholders have highlighted circumstances where the current rules for Capital Gains Tax (CGT), when applied to DeFi, are inconsistent with the substance of the activity.
As part of the review into the application of tax rules to DeFi transactions, the government ran a Call for Evidence from 5 July to 31 August 2022. Most respondents agreed that a change in the tax rules would be beneficial for the industry and users.
This consultation represents the next stage of the policy making process. The government is inviting comments on a potential legislative solution which aims at better aligning the taxation of cryptoassets used in certain DeFi transactions with the underlying economic substance.
HMRC would like to hear from investors, professionals and firms engaged in DeFi activities including:
- technology and financial service firms
- trade associations and representative bodies
- academic institutions and think tanks
- legal, accountancy and tax advisory firms