CryptoTax UK · Guide
Section 104 pool for crypto, explained
The Section 104 pool is the rule that decides what a crypto disposal actually 'cost' you for UK Capital Gains Tax purposes. Get it right and the rest of your tax return falls into place. Get it wrong and you may over- or under-report your gain by a wide margin. Educational only — always confirm with HMRC.
See my Section 104 pool →What is a Section 104 pool?
Section 104 of the Taxation of Chargeable Gains Act 1992 sets out HMRC's default matching rule for fungible assets like shares and crypto. All units of the same crypto (e.g. all your BTC) are pooled together with a weighted-average cost basis. When you sell, the cost basis used is the pool's average — not the price you paid for any specific coin.
How the matching rules interact
HMRC applies three matching rules in order: (1) Same-day rule — disposals first match acquisitions of the same crypto made on the same day. (2) 30-day or 'bed-and-breakfasting' rule — disposals next match acquisitions made in the following 30 days. (3) Section 104 pool — anything remaining matches against the pool's weighted-average cost. The pool is the catch-all that almost every long-term holder spends most of their time in.
Worked example: building a Section 104 pool
You buy 1 BTC at £20,000 and 1 BTC at £40,000. Your Section 104 pool now holds 2 BTC at a cost basis of £60,000, or £30,000 per BTC on average. You later sell 1 BTC for £50,000. The cost basis taken from the pool is £30,000 and your gain is £20,000. The pool now holds 1 BTC at £30,000. The disposal does not look at which individual coin you sold — only the pooled average.
What 'feeds' the pool
Anything that gives you new units of the same crypto adds to the pool at its GBP cost on the date you acquired it. This includes buys, swaps in (the GBP value of the crypto received), airdrops (typically at zero cost — see our HMRC guide), staking rewards taken as income (where the receipt value becomes the cost basis), and any other on-chain acquisitions.
Why crypto-to-crypto swaps complicate things
A swap is two transactions for tax purposes: a disposal of the asset you sent in, and an acquisition of the asset you received — both at their GBP value on the trade date. So swapping ETH for SOL closes part of your ETH pool and opens a new entry in your SOL pool. Most UK-resident traders are surprised to learn that exchange ledgers showing 'profit/loss' don't account for this correctly.
How to track your pool over time
Keep a running spreadsheet — or use a calculator — with: date, asset, action (buy/sell/swap), quantity, GBP value, running pool quantity, running pool cost, and running average. The CryptoTax UK engine maintains this pool automatically and shows a per-asset breakdown on the Results page. You can also export it as part of the accountant pack.
Frequently asked questions
Is there a separate Section 104 pool for each crypto?
Yes — you maintain a separate pool for each distinct crypto. Your BTC pool, ETH pool and SOL pool are independent. Hard forks may create a separate pool for the new asset at zero or apportioned cost.
What about transfers between my own wallets?
Moving crypto between wallets you own is not a disposal and does not affect the pool. Only acquisitions and disposals (or events HMRC treats as disposals) change the pool's cost and quantity.
Do losses reduce the pool's value?
Losses do not directly reduce the pool. A disposal at a loss uses the pool's cost basis as the deemed cost; the loss itself is calculated as proceeds minus cost basis (negative) and may be carried forward as an allowable loss for future CGT.
What if I held crypto before HMRC's rules existed?
HMRC's pooling rules have applied to crypto for individuals since at least 2018; before that, general CGT principles applied. Acquisitions are still typically added to the pool at their GBP value on the date of acquisition, even if that was years ago.
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.