CryptoTax UK · Guide
Liquidity Pool Tax UK — HMRC Guide for 2025/26
Adding crypto to a liquidity pool on Uniswap, Curve or similar DeFi protocols raises complex UK tax questions. Educational only — not tax advice; DeFi tax treatment is an evolving area.
Estimate my DeFi tax →Adding to a liquidity pool — is it a disposal?
When you deposit token pairs into a liquidity pool and receive LP tokens in return, this may constitute a disposal of the deposited assets for CGT purposes. Many practitioners treat the deposit as a disposal at the market value on the date of deposit.
Removing from a liquidity pool
When you burn LP tokens to recover your underlying assets, you are likely disposing of the LP tokens (a CGT event) and reacquiring the underlying assets at their current market value.
Trading fee income
Trading fees accumulated in a liquidity pool position may be treated as income (taxed in the year earned) or as part of the overall position. HMRC has not issued specific guidance on this point.
Frequently asked questions
Is providing liquidity on Uniswap taxable in the UK?
Possibly — many practitioners treat the deposit as a disposal of the contributed assets. The position is genuinely uncertain and specialist DeFi tax advice is recommended for significant LP activity.
How do I record LP token transactions for HMRC?
Record the date of deposit, the assets and quantities deposited, their GBP value on that date, the LP tokens received and their value. On withdrawal, record the same information for the assets recovered.
More UK crypto-tax guides
Educational guidance only. CryptoTax UK is not a regulated tax adviser and the information above does not constitute tax, legal or financial advice. Always confirm your specific position with HMRC or a qualified accountant before filing.