HMRC has published a new chapter in its cryptoassets manual on decentralised finance. Decentralised finance (DeFi) is a term used to cover the crypto equivalents of traditional financial services, including exchanges, lending, saving and derivatives. This new guidance covers DeFi lending, which facilitates lending between unconnected borrowers and lenders.
The guidance covers the meaning of loan and staking in DeFi lending, the making of a DeFi loan, and the income tax, corporation tax and chargeable gains consequences of these activities.
The return received by the lender/liquidity provider is subject to income and corporation tax as a non-cash receipt in the miscellaneous income provisions.
The repayment of principal will be a capital transaction. The guidance contains 10 different examples of the chargeable gains consequences of DeFi lending activities.
HMRC has published a new chapter in its cryptoassets manual on decentralised finance. Decentralised finance (DeFi) is a term used to cover the crypto equivalents of traditional financial services, including exchanges, lending, saving and derivatives. This new guidance covers DeFi lending, which facilitates lending between unconnected borrowers and lenders.
The guidance covers the meaning of loan and staking in DeFi lending, the making of a DeFi loan, and the income tax, corporation tax and chargeable gains consequences of these activities.
The return received by the lender/liquidity provider is subject to income and corporation tax as a non-cash receipt in the miscellaneous income provisions.
The repayment of principal will be a capital transaction. The guidance contains 10 different examples of the chargeable gains consequences of DeFi lending activities.
