#cefi

If your crypto interest is stacking up and you're sweating over how to declare it to HMRC, I get it — taxes are a pain. I'll break down how DeFi vs CeFi interest can count as income or capital depending on beneficial ownership and disposals, so you can file SA100/SA109 without the guesswork.

CeFi interest is usually treated as taxable income when the platform holds custody. If the taxpayer keeps control, credited rewards usually count as income; if control ends, treat the event as a disposal for CGT.

How HMRC decides income versus capital

HMRC checks who has beneficial ownership at the moment of receipt. HMRC also checks whether the event causes a disposal for tax.

Who is the beneficial owner?

Ask who can spend or pledge the asset at the moment of receipt. If the platform moves the asset without the taxpayer, the platform likely holds beneficial ownership.

Read the platform custody terms and keep screenshots of those terms. Capture wording that limits withdrawals or gives the platform custody.

When does a disposal occur?

A disposal happens when tokens leave the taxpayer's control or when tokens change identity. Swapping token A for token B counts as a disposal.

Adding to or removing from a liquidity pool often counts as a disposal and a receipt. Record each event with txid, timestamp and GBP value.

A single clear example avoids guesswork when filing. Keep record trails that match the decision steps.

Tax treatment: centralised crypto lending

Centralised lending interest usually counts as taxable income when the platform retains custody. The platform custody terms and withdrawal limits determine HMRC's view.

Most exchange paid interest is income in the year received. For tax year 2024/25, use the taxpayer's marginal rates to calculate tax.

Stick around — the line HMRC draws between income and capital can flip your tax bill in ways you won't expect...

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