CryptoTax UK · Guide
Section 104 Pool Explained — UK Crypto Tax Guide
The Section 104 pool is the core of HMRC's crypto cost basis method. This guide explains exactly how it works with step-by-step worked examples. Educational only — not tax advice.
Calculate using Section 104 rules →What is the Section 104 pool?
The Section 104 pool (named after Section 104 of the Taxation of Chargeable Gains Act 1992) is a running total of the quantity and total cost of all your acquisitions of a given asset. Each time you buy, you add to the pool. Each time you sell, you draw from it at the current weighted average cost per unit.
Step-by-step example
1 Jan 2024: Buy 1 ETH at £2,000. Pool: 1 ETH / £2,000 total cost. 1 Mar 2024: Buy 1 ETH at £3,000. Pool: 2 ETH / £5,000 total cost. Average cost per ETH = £2,500. 1 Jun 2024: Sell 1 ETH for £4,000. Gain = £4,000 - £2,500 = £1,500. Remaining pool: 1 ETH / £2,500 total cost.
Updating the pool for fees
Acquisition fees (exchange fees paid when buying) are added to the pool cost. Disposal fees (exchange fees paid when selling) are deducted from proceeds. Both reduce your CGT liability.
One pool per asset across all exchanges
You maintain one Section 104 pool per asset — not per exchange. All your ETH purchases across Coinbase, Kraken, Binance and any other exchange go into a single ETH pool with a single weighted average cost.
Frequently asked questions
Do I need a separate Section 104 pool for each crypto?
Yes — you maintain a separate Section 104 pool for each distinct crypto asset. Your BTC pool is separate from your ETH pool, your SOL pool and so on.
What happens to the pool when I transfer crypto to a different wallet?
Transferring crypto between your own wallets does not affect the Section 104 pool. The pool tracks economic ownership, not which wallet the asset is in.
Does the Section 104 pool reset each tax year?
No — the pool is continuous and carries over between tax years indefinitely. It only reduces when you dispose of the asset.
More UK crypto-tax guides
Ready to estimate your UK crypto tax?
Free calculator. No sign-up needed.
Calculate using Section 104 rules →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.