UK announces capital gains exemption for stablecoins

HM Revenue & Customs published the consultation response on 13 July 2026 and announced a future UK CGT exemption for eligible stablecoins. The Government would propose to apply it from April 2027 through Finance Bill 2026-27. In July it was an announced policy, not a current exemption.

The problem with taxing every payment

Under existing rules, disposing of a cryptoasset can generate a capital gain or loss. Buying a coffee with a stablecoin constitutes a disposal and requires comparing value received with cost. Although the difference is minimal, the record-keeping burden can be disproportionate.

Stability against a currency makes these tokens used as payment. Treating every move as an investment sale makes its function difficult. The March consultation asked how to simplify without opening an exemption to speculative assets.

The Government responded that it would propose excluding disposals of eligible stablecoins by individuals and trustees from the Capital Gains Tax. The measure would bring its use closer to money. It would not automatically change VAT, income or business treatment.

Which stablecoins would be eligible

The policy was linked to backed stablecoins that met conditions. It did not include bitcoin or algorithmic tokens without sufficient backing. The final definition would depend on the Finance Bill and related regulations.

Eligibility needs to consider reference currency, reserves, redemption and regulation. A token that claims to hold a pound but invests in risky assets may not deliver. It must also be decided what happens if the token loses its peg or its issuer is no longer authorised.

The exemption would apply to the disposal of the token, not necessarily to the yield obtained. Interest, rewards and discounts can still be income. Separating principal and return avoids considering all movements tax-free.

Lending and savings income

The Government announced plans to treat certain stablecoin loan income as savings income. This category can simplify the treatment of users who transfer tokens and receive a return, but it requires defining when there is a loan and who pays.

A DeFi pool can generate fees, incentives, and token swaps. Not everything fits into interest. The automatic form does not decide the tax nature. The taxpayer must examine rights and transactions.

Returning a different token or liquid receipt may involve additional disposals. The final rules will need to prevent a payment simplification from being inadvertently extended to investment strategies.

Business and Corporation Tax

For certain business operations, the response favored following the accounting treatment for Corporation Tax. This may reduce calculations for each operational use, but does not eliminate the need for correct books and valuation in functional currency.

Companies must distinguish stablecoins held for treasury, inventory or investment purposes. The accounting treatment depends on function. A risk policy must cover issuer, custody and loss of parity, although the tax is simpler.

What didn’t change in July

The response to a consultation does not modify the legislation. Until the Finance Bill is passed and comes into force, existing rules continue to apply. Taxpayers could not stop reporting 2026 disposals based on the announcement.

Maintaining records during the transition is still necessary to calculate earnings under the current rule.

The planned date was April 2027. The final text could change definition, scope or conditions. Suppliers had to communicate the measure as future and avoid promising savings already available.

Outlook from 2026

As of August 7, 2026, the reform was still pending legislation. The result of the consultation shows clear direction, but no operational exemption. Previous operations continue under the current framework.

The proposal recognizes that payment stablecoins and investment cryptoassets may require different treatments. Its success will depend on a precise definition that simplifies payments without creating arbitrage for yield-bearing products.