The UK government plans to change how eligible stablecoins are taxed.
Under draft legislation published on 13 July 2026, disposals of eligible stablecoins by individuals and trustees would become exempt from Capital Gains Tax from 6 April 2027. Certain qualifying returns from eligible stablecoins would also be treated as savings income for Income Tax purposes. HMRC: Tax treatment of stablecoins
The legislation is still draft, so the law has not yet changed.
HMRC: Tax treatment of stablecoins
How are stablecoins taxed now?
Stablecoins are currently generally taxed in the same way as other cryptoassets.
HMRC says there are no specific tax rules for stablecoins under the current system. Their treatment depends on the normal tax rules and the features of the asset and transaction. HMRC: Stablecoin consultation
For individuals, this means a disposal of a stablecoin can currently create a Capital Gains Tax gain or loss.
For example, if you sell Bitcoin for a stablecoin and later use that stablecoin to buy Ether, there are currently two separate disposals to consider:
- the disposal of the Bitcoin; and
- the later disposal of the stablecoin.
Even if the stablecoin stays close to its intended value, its sterling value can still move. This is particularly relevant to US dollar stablecoins, because changes in the GBP/USD exchange rate can create gains or losses when measured in pounds. HMRC: Stablecoin consultation
Why is the government changing the rules?
The government considers that the current treatment can create unnecessary tax administration where stablecoins are used like money.
The March 2026 call for evidence looked at whether the tax rules should change as stablecoins become more widely used for payments and financial transactions. Respondents broadly supported treating eligible stablecoins more like money for tax purposes. HMRC: Stablecoin consultation outcome
The government concluded that a Capital Gains Tax exemption for eligible stablecoins would reduce the administrative burden for individuals, particularly where stablecoins are used as a means of payment or as an intermediate asset between crypto trades. HMRC: Stablecoin consultation outcome
The government also decided that qualifying interest-like returns should be treated as savings income rather than under the current miscellaneous income approach. HMRC: Stablecoin consultation outcome
What will change from 6 April 2027?
For individuals and trustees, the draft rules make two main changes:
- gains on disposals of eligible stablecoins would be exempt from Capital Gains Tax; and
- certain qualifying returns from eligible stablecoins would be treated as interest for Income Tax purposes.
The intended start date is 6 April 2027. HMRC: Tax treatment of stablecoins
The proposed exemption applies to disposals made on or after that date. HMRC: Draft stablecoin legislation
What is an eligible stablecoin?
Not every token described as a stablecoin will automatically qualify.
Under the draft legislation, a cryptoasset can qualify as an eligible stablecoin where it is reasonable to assume that enough currency or other assets are held to support a stable value against sterling or another currency, and the cryptoasset is designed to be used as a means of payment or settlement. HMRC: Draft stablecoin legislation
The cryptoasset must also be widely available. The draft rules say this means it must be available to a substantial number of independent, unconnected people and must be, or be expected to be, traded frequently enough and in sufficient volume to form an active market. HMRC: Draft stablecoin legislation
The legislation does not name specific stablecoins that qualify.
HMRC used USDT and USDC as examples of popular stablecoins in its March 2026 call for evidence, but that does not mean either token has been formally confirmed as eligible under the new rules. HMRC: Stablecoin consultation
What happens when you use a stablecoin between crypto trades?
This is where the change could make a noticeable difference.
Suppose you sell Bitcoin for an eligible stablecoin and later use that stablecoin to buy Ether.
Under the current rules, both the Bitcoin disposal and the later stablecoin disposal need to be considered for Capital Gains Tax.
Under the draft rules from 6 April 2027:
- the Bitcoin disposal would still need to be considered for Capital Gains Tax;
- a gain on the disposal of the eligible stablecoin would not be a chargeable gain; and
- the Ether acquisition would still form part of your future Capital Gains Tax records.
The proposed exemption therefore applies to the eligible stablecoin. It does not make the wider crypto transaction tax-free. HMRC: Draft stablecoin legislation
If an eligible stablecoin falls in value, the exemption also means that an economic loss on the stablecoin would not normally produce an allowable Capital Gains Tax loss. The government expressly acknowledged that the exemption removes both gains and losses from the CGT system. HMRC: Stablecoin consultation outcome
What about US dollar stablecoins?
The draft definition is not limited to sterling stablecoins.
It can apply where a stablecoin seeks to maintain a stable value against sterling or another currency. HMRC: Draft stablecoin legislation
This is important because US dollar stablecoins are widely used in crypto markets.
Under the current rules, a stablecoin may remain worth one US dollar but still produce a sterling gain or loss because the GBP/USD exchange rate has moved.
If the new rules take effect as drafted and the stablecoin qualifies as an eligible stablecoin, gains on disposal would be exempt from Capital Gains Tax. HMRC: Draft stablecoin legislation
What happens to stablecoins already held on 6 April 2027?
The draft legislation contains a transitional rule for individuals and trustees who already hold an asset immediately before 6 April 2027 and whose later disposal would fall within the new exemption.
The rules treat the person as disposing of the asset immediately before 6 April 2027 and immediately reacquiring it at market value. Any resulting gain or loss is treated as arising on 6 April 2027. HMRC: Draft stablecoin legislation
This creates a clear boundary between the existing Capital Gains Tax rules and the proposed exemption.
Historic gains or losses are therefore not simply wiped out when the new regime starts.
Anyone holding significant stablecoin balances at the start of the new rules may need to consider this transitional treatment carefully.
How will stablecoin returns be taxed?
The draft legislation also changes the treatment of some returns earned from eligible stablecoins.
A qualifying stablecoin return arising under a cryptoasset debt or a qualifying single cryptoasset lending arrangement would be treated as interest for Income Tax purposes. HMRC: Draft stablecoin legislation
For a return under a cryptoasset debt, the draft rules require the return to relate to the time value of the cryptoassets and for the cryptoassets to be eligible stablecoins when the return arises. HMRC: Draft stablecoin legislation
The new treatment would apply to qualifying returns arising on or after 6 April 2027. HMRC: Draft stablecoin legislation
This means those qualifying returns would fall within the savings income rules rather than being treated under the current miscellaneous income approach.
Whether the Personal Savings Allowance is available would depend on the individual’s wider tax position.
Does this make all stablecoin income savings income?
No.
The draft rules apply to qualifying stablecoin returns that meet the conditions in the legislation.
A payment does not become interest simply because it is connected with a stablecoin. The nature of the arrangement and the return still need to be considered. HMRC: Draft stablecoin legislation
What about companies?
This article focuses on individuals, but the draft legislation also contains separate rules for companies.
The proposed company rules would generally bring certain transactions involving eligible stablecoins within the Corporation Tax loan relationship rules. The intended start date for companies is 1 April 2027. HMRC: Tax treatment of stablecoins
Are the new stablecoin rules final?
No.
The government announced the measure on 13 July 2026 and published draft legislation for Finance Bill 2026-27. HMRC: Tax treatment of stablecoins
The policy intention is clear, but the legislation still needs to complete the legislative process.
At the time of writing, HMRC has not published a later substantive update changing the proposed start date or the main structure of the rules.
HMRC: Finance Bill 2026-27 draft legislation and technical tax documents
The main point
The proposed rules would make a significant difference for individuals who regularly use stablecoins.
If enacted as drafted, disposals of eligible stablecoins would become exempt from Capital Gains Tax from 6 April 2027, while certain qualifying returns would be taxed as savings income.
The word eligible remains important. The legislation sets conditions rather than naming specific tokens, so it would be wrong to assume that every asset marketed as a stablecoin will qualify.
The transitional rules also matter for assets already held when the new regime starts.
For transactions before 6 April 2027, the current tax rules continue to apply.
For a wider explanation of how crypto is taxed under the current rules, see How Is Crypto Taxed in the UK? A Simple Guide.
Need help with stablecoin tax?
Sat Tax provides specialist crypto tax support for UK individuals.
We can help review stablecoin transactions, calculate capital gains and income under the current rules and consider how the proposed changes may affect future reporting.
If you would like help with your crypto tax position, get in touch with Sat Tax to discuss your circumstances and the records you have available.
This article is for general information only and is not personal tax advice. Tax treatment and reporting requirements depend on your circumstances and the tax rules in place at the relevant time.
