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CRYPTO60000: ‘DeFi’nitive guidance from HMRC?

Speed read
HMRC’s guidance on decentralised finance was released as an update to the Cryptoassets Manual on 2 February 2022. It covers HMRC’s view on when and how lending and borrowing transactions should be taxed for individuals and corporates. HMRC reiterates that a distinction should be drawn between when activities constitute trading and when they are investment. It notes that a disposal is made when there is a change in beneficial ownership of cryptocurrency, which potentially affects many taxpayers who have taken out collateralised loans. In all cases, the economic reality of the transaction should be understood before the tax treatment is considered.

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