In my first note on the Autumn Budget on 28 October I gave it 4 out of 10 and stuck to the headline measures. A few days on, there is one announcement I passed over that deserves a second look. It is the closest thing to good news for crypto holders in the Budget, and the small print is more interesting than the headline.
What has been announced
From April 2027 the government will treat "eligible stablecoins" more like money for tax. The legislation will be in the Finance Bill 2026-27. The draft was first published on 13 July 2026 and the technical consultation closed on 7 September 2026. On 28 October the government updated the policy paper and the draft, so the measure is firmer than it was, but it is not law until the Finance Bill is enacted. In summary:
- Individuals and trustees: disposals of eligible stablecoins will be exempt from capital gains tax, for disposals from 6 April 2027.
- Interest-like returns: returns from lending eligible stablecoins will be taxed as interest, which means savings income, for returns arising from 6 April 2027.
- Companies: no exemption. Eligible stablecoins are brought into the loan relationship rules, which I explain below.
The government's reasons are that stablecoins are increasingly used for payments, cross-border transfers and treasury, and that tracking every small disposal is a disproportionate burden. That is fair. At the moment, swapping one stablecoin for another coin, or spending it, is a disposal that has to be tracked, pooled and reported. In my experience the gains on most of those transactions are small, so the saving is mainly in record keeping. The government chose a full exemption, not one limited to payments, because holders often cannot know when they buy a coin how they will use it.
Which stablecoins will qualify
The draft test is that it is reasonable to assume enough currency or other assets are held to keep a stable value against sterling or another currency, that the coin is designed to be used as a means of payment or settlement, and that it is widely available, meaning offered to a substantial number of unconnected people with an active market. The test is not limited to sterling, so a dollar-backed coin can qualify if it meets the other conditions. Backing made up of the same type of cryptoasset does not count, which is aimed at unbacked algorithmic coins. Bitcoin and other cryptocurrencies are not included.
Two cautions. First, HMRC has said it will publish guidance on whether the largest stablecoins are eligible, so please do not assume that any particular coin qualifies until it does. Second, the draft sets no licensing test for the issuer, but the government's response says the definition will be based on the regulatory definition of a qualifying stablecoin, so I would not be surprised to see the test tighten. Confidence: medium.
The catch for companies
The exemption does not extend to companies. Instead, a company holding an eligible stablecoin is treated as holding a money debt under the loan relationship rules, and the tax follows the amounts recognised in the company's accounts. The rules apply to accounting periods beginning on or after 1 April 2027. A company holding stablecoins on that date is treated as disposing of them and reacquiring them at their tax-adjusted carrying value, and the gain or loss on that deemed disposal is chargeable or allowable. The government's impact note says companies can elect to defer those transitional adjustments until the coins are disposed of.
Why does this matter? Because a dollar stablecoin is stable against the dollar, not against the pound. In your own hands, I read the exemption as covering the whole gain, including any movement in sterling terms. In your company's hands, I expect the exchange movement to be taxed as income, or relieved as a deduction, following the accounts, even where no coin has been sold. Neither the draft nor the impact note deals with exchange differences, so please treat that as my reading (confidence: medium) until more detail is published.
The result is that the same coin can be tax-free in your name and taxed in your company. "Treated like money" sounds generous, and for a company it means treated like a loan. If your company holds stablecoins as treasury, or accepts payment in them, this needs a conversation with your accountant before 1 April 2027. Please do not move holdings between yourself and your company to chase the exemption without speaking to me first, because a transfer can be a disposal, a distribution or a director's loan.
The return is taxed at the full rate
The other side of "like money" is that interest-like returns from lending stablecoins are taxed as savings income. In my first note I covered the Budget's increase in the rates on savings income, and on property income in England, Wales and Northern Ireland, from 6 April 2027, to 24%, 44% and 49%. Put the two together and an individual lending stablecoins for a return will pay up to 49% on it, after any personal savings allowance (which is nil for an additional rate taxpayer), while the capital is exempt. That is the Budget in one sentence: relief where the gain is small and tax where the income is real.
The Budget also extends the duty to deduct income tax at source from interest-like returns paid under stablecoin debts, with an exclusion for debts entered into through exchanges that make them widely available to unconnected persons. If your business pays a return on stablecoins, that is a new compliance point.
Returns from automated market making are not treated as interest, because they may not be equivalent to it, and the government's July response said it was still considering whether the loan and liquidity pool rules should apply retrospectively for a limited period. I could not confirm whether that has changed since 28 October.
No help if the peg fails
The government has said it will give no specific relief where a stablecoin falls below its par value, temporarily or permanently, because that would effectively underwrite losses. Gains on an exempt asset are not taxed, and in my view the usual result is that losses on it are not allowable either. So anyone holding stablecoins personally should not expect a capital loss if a coin fails. For a company, the loss would flow through the accounts under the loan relationship rules, but I would not assume it is relievable without looking at the facts.
Existing holders on 6 April 2027
This is the point I would watch most closely. The draft treats a holder immediately before 6 April 2027 as disposing of the coins and reacquiring them at market value, with any gain or loss accruing on that date. The draft does not say the gain is exempt, and the government's impact note says individuals and trustees can elect to defer these transitional gains or losses until the coins are disposed of. That points to a gain being brought into charge, with the option to defer it, so please assume that a gain may be taxable unless you make the election. Confidence: medium. The draft also treats exempt stablecoin holdings as a separate pool from other coins, with disposals matched first to the non-exempt holding.
The government has said it will talk to stakeholders about VAT, stamp taxes, Making Tax Digital and ISA eligibility, but it has not committed to any change.
What to do now
- If you hold stablecoins personally, please keep your records, and note the market value and base cost of each holding at 5 and 6 April 2027. If you have a gain, we should look at the deferral election.
- If your company holds stablecoins or takes payment in them, please tell me before 1 April 2027 so we can look at the accounting, the deferral election and the tax together.
- If you lend stablecoins for a return, work out the tax at your own marginal savings rate from April 2027, because the return will not be taxed as a capital gain.
- If you pay a return on stablecoins in your business, please ask me about the new duty to deduct income tax.
My view is that the measure is welcome for individuals and less so for companies, and it does not change my score for the Budget as a whole. If you already know that this will affect you, please get in touch through the contact page or at rob@rmhoconsulting.com.
Best wishes,
Rob Osborne BA CTA
Director, RMHO Consulting Limited
www.rmhoconsulting.com
Last updated 31 October 2026. This article is general information based on the draft legislation and policy papers first published on 13 July 2026 and updated on 28 October 2026. The legislation has not been enacted, so the position may change, and it is not advice on your own circumstances.