Section 104 pool explained — UK crypto Capital Gains Tax, with worked examples (2026)

Most UK crypto investors assume their Capital Gains Tax works like a brokerage statement — buy a coin, sell it later, the gain is the difference. It does not. HMRC calculates UK crypto CGT using the Section 104 pool: every unit of a given token sits in a single pooled holding with one average cost, and your gain on a disposal is measured against that average, not against any specific purchase. Getting the pool right is the single hardest part of a UK crypto return, and — in the era of CARF platform reporting — the part HMRC can now check against the data. This guide works through it with numbers. It is an explainer, not tax advice; for your circumstances, consult a qualified UK tax adviser.

What the Section 104 pool is

The Section 104 pool takes its name from s.104 of the Taxation of Chargeable Gains Act 1992, and HMRC codifies its application to crypto in the Cryptoassets Manual (CRYPTO22200). The principle: you do not track individual coins. For each token type — one pool for BTC, a separate pool for ETH, and so on — HMRC pools every unit you hold into a single holding with a single total allowable cost. When you acquire more, both the quantity and the total cost rise, producing a new average. When you dispose, you use that pooled average cost as your base.

This is not first-in-first-out (FIFO), and it is not specific-identification — two methods crypto investors often assume apply and that produce different (sometimes very different) numbers. Using the wrong method is one of the most common UK crypto-tax errors, and post-CARF it is one HMRC is positioned to notice.

How the pool works — a worked example

Take a single token, BTC, and three transactions:

• Buy 1 BTC for £20,000. Pool: 1 BTC, total cost £20,000, average £20,000.
• Buy 1 BTC for £30,000. Pool: 2 BTC, total cost £50,000, average £25,000 per BTC.
• Sell 1 BTC for £40,000. Your allowable cost is the pooled average, £25,000 — not the £20,000 you paid first, and not the £30,000 you paid most recently. Gain = £40,000 − £25,000 = £15,000. The pool now holds 1 BTC at a £25,000 average.

Notice what the pool does: it averages away the order of your purchases. An investor who assumed FIFO would have reported a £20,000 gain (£40,000 − £20,000); an investor assuming last-in-first-out would have reported £10,000. The correct, HMRC-mandated answer is £15,000. On a real history of hundreds of transactions across several exchanges, those differences compound into materially wrong numbers — which is the entire reason crypto-tax software exists.

The two rules that override the pool

Before the pool is applied, HMRC matches disposals against two short-window rules, in this order:

The same-day rule (TCGA 1992 s.105). Any disposals are first matched against acquisitions of the same token made on the same day, regardless of the pool. If you buy and sell the same coin on one day, that pairing is used before the pool is touched.

The 30-day “bed-and-breakfast” rule (TCGA 1992 s.106A). Disposals are then matched against acquisitions of the same token in the following 30 days. This is an anti-avoidance rule: it stops an investor from selling to “crystallise” a loss or reset a cost basis and immediately rebuying. If you sell 1 BTC and buy 1 BTC back within 30 days, the disposal is matched to that rebuy — at the rebuy’s cost — not to the pool. Only after the same-day and 30-day matches are exhausted does the Section 104 pool apply to the remainder.

These rules are where manual reconciliation breaks down most often, because they require checking every disposal against a rolling 30-day forward window across all of your venues at once — exactly the kind of cross-referencing software does well and humans do badly.

The rates and allowance — use the current numbers

Once you have the gain, you apply the rate — and this is where a startling amount of UK crypto content is simply out of date. In the Autumn Statement of 30 October 2024, the UK raised CGT rates with immediate effect, from the old 10%/20% (basic/higher rate) to 18%/24%. Any guide or calculator still quoting 10%/20% for a disposal after that date is wrong, and an investor reconciling against CARF-reported data needs the current figures. Your rate depends on which band the gain falls into once stacked on your income.

Two more current numbers matter. The annual exempt amount — the gain you can realise tax-free each year — has been cut twice, from £12,300 to £6,000 (2023/24) and then to £3,000 (2024/25 onwards). If your total gains exceed £3,000, you must report via Self Assessment, completing the SA108 Capital Gains Summary. Far more ordinary investors now cross that threshold than did two years ago, which is why the Section 104 mechanic has gone from a niche concern to something a typical UK holder needs to get right.

Why this is hard by hand — and what handles it

Reconstructing accurate Section 104 pools across a multi-year, multi-venue history, while correctly applying the same-day and 30-day rules and accounting for transfers, staking, and DeFi events, is genuinely difficult to do by hand without errors. It is the reason UK-focused crypto-tax software exists, and the reason it is worth its fee for any investor past a handful of transactions.

Two tools lead the UK market. Koinly is the broadest, with extensive exchange and wallet coverage and an HMRC report that builds the Section 104 pool and applies the short-window rules automatically. Recap is the UK-incorporated specialist, designed around UK rules from the ground up with an end-to-end-encryption privacy model. Our reviews decode the affiliate economics and product trade-offs of each; for the pooling itself, either will produce the HMRC-format numbers this guide describes.

A worked example of the 30-day rule

The 30-day rule is the one that catches people out, so here it is with numbers. Suppose your BTC pool holds 1 BTC at a £25,000 average cost, and:

• Day 1: sell 1 BTC for £40,000.
• Day 20: buy 1 BTC for £38,000.

Intuitively you might expect a £15,000 gain (£40,000 − £25,000 pooled cost). But the 30-day rule overrides the pool: because you reacquired the same token within 30 days of the disposal, the sale is matched to the Day 20 rebuy, not the pool. Your gain becomes £40,000 − £38,000 = £2,000, and the pool is left untouched, still holding its original 1 BTC at £25,000. The rule exists to stop “bed-and-breakfasting” — selling to crystallise a loss or reset a basis and immediately buying back — and it applies whether the rebuy helps or hurts you. Across a busy trading history with frequent re-entries, these matches reshuffle the numbers substantially, and they have to be checked disposal-by-disposal against a rolling forward window.

Staking, airdrops, and the two-layer problem

Not everything that lands in your wallet is a capital gains question. Staking rewards, certain DeFi returns, and many airdrops are generally treated as income at the moment you receive them, valued in pounds at that day’s market price — that value is taxed as income, and it also becomes the acquisition cost that enters your Section 104 pool. When you later dispose of those coins, the CGT gain is measured against that pooled cost. The result is a two-layer treatment: income tax on receipt, then CGT on disposal, with the pool linking the two. It is one of the most common places a hand-built calculation goes wrong, because it mixes two tax regimes for a single coin, and HMRC’s DeFi guidance is still developing — an area to take professional advice on rather than guess.

Common questions

Is UK crypto CGT calculated FIFO?

No. This is the most common misconception. UK CGT uses the Section 104 pooled average cost, with the same-day (s.105) and 30-day (s.106A) rules layered on top — not first-in-first-out, and not specific identification.

Do I need a separate pool for each coin?

Yes. Each token type has its own Section 104 pool — one for BTC, a separate one for ETH, and so on. You never average across different tokens.

Is moving crypto between my own wallets a disposal?

No. Transferring coins between wallets or accounts you control is not a disposal and triggers no CGT — though it is still worth recording, because it complicates reconciliation and because transfer fees paid in crypto can themselves be small disposals.

Is swapping one crypto for another taxable?

Yes. A crypto-to-crypto swap is a disposal of the coin you give up, valued in pounds at the time of the swap — even though no fiat changes hands. This surprises many investors and is a frequent source of unreported gains.

The bottom line

UK crypto CGT is pooled, averaged, and rule-bound in ways a brokerage mindset gets wrong: the Section 104 pool uses average cost, the same-day and 30-day rules override it, and since October 2024 the rates are 18%/24% against a £3,000 allowance. Get the pool right, keep your records, and — in the CARF era — your filing will match the data HMRC now receives. This guide is general information, not tax advice; for your specific position, consult a qualified UK tax professional or HMRC directly.