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ARTICLE · 02 MARCH 2022

Borrowers Beware – HMRC's New DeFi Guidance

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On 2 February 2022, HMRC updated its Cryptoassets Manual to include a new DeFi section setting out, for the first time, HMRC's view on the taxation of cryptoassets used in decentralised finance or ‘DeFi' transactions.

United KingdomTechnology
Natasha Oakshett
Natasha Oakshett
Ed Cubitt
Ed Cubitt
Lauren Rapeport
Lauren Rapeport
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On 2 February 2022, HMRC updated its Cryptoassets Manual to include a new DeFi section setting out, for the first time, HMRC's view on the taxation of cryptoassets used in decentralised finance or 'DeFi' transactions. HMRC appears to be one of the first tax authorities to issue such detailed guidance on DeFi, and this update will be welcomed by those who are seeking further clarification on HMRC's views in this area.

But the new guidance looks likely to disrupt the DeFi market in ways that crypto investors and users may see as disadvantageous. Indeed, Crypto UK, an industry body, has attacked the guidance as an 'unnecessary burden' and 'inconsistent' with the approach of other UK government bodies. Here we give an overview of the new guidance as it pertains to individuals.

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