The Section 104 pool for crypto, explained
Worried you've worked out your crypto cost the wrong way? You probably can't just pick which coins you sold. HMRC makes you pool each cryptoasset and use an average cost, the Section 104 pool, after first checking the same-day and 30-day rules. It's the single biggest source of wrong crypto-tax numbers, so here's exactly how it works.
In the UK you cannot simply choose which coins you sold. HMRC pools every unit of the same cryptoasset into one Section 104 pool and uses the pool's average cost as your cost basis, after first applying the same-day rule and then the 30-day (bed and breakfast) rule. So the cost you deduct on a disposal is the pooled average, not the price of any single purchase.
When you dispose of crypto in the UK, you need a cost basis, meaning what those coins cost you, to work out the gain. The catch is that with shares and crypto you usually can't just point to one specific purchase and say “that's the one I sold”. Instead, HMRC's rules decide which cost to use, in a fixed order. (New to all this? Start with how UK crypto tax works.)
The matching order
For each disposal, HMRC matches it to acquisitions in this order:
- Same-day rule. Coins of the same type bought on the same day as the disposal are matched first.
- 30-day “bed & breakfast” rule. Then come coins bought in the 30 days after the disposal (this stops you selling and rebuying to crystallise a loss).
- Section 104 pool. Anything left is matched to the pool: a running total of all your remaining coins of that type and their total cost, giving an average cost per coin.
How the pool works
The Section 104 pool holds, for each cryptoasset, the total quantity you still hold and the total allowable cost. Every acquisition adds to both; every disposal removes coins at the current average cost. The average only changes when you buy more. Selling doesn't change the cost per coin, just the quantity.
Worked example
Take one cryptoasset, “ALT”, bought twice and then partly sold:
| Date | Action | Coins | Pool qty | Pool cost | Avg cost |
|---|---|---|---|---|---|
| 1 Jan | Buy for £1,000 | +100 | 100 | £1,000 | £10.00 |
| 1 Mar | Buy for £1,000 | +50 | 150 | £2,000 | £13.33 |
| 1 Jun | Sell for £1,500 | −50 | 100 | £1,333.33 | £13.33 |
Working out the June sale
The June sale of 50 ALT uses the average cost: 50 × £13.33 = £666.67. Gain = £1,500 − £666.67 = £833.33. The pool keeps 100 ALT with £1,333.33 of cost carried forward to the next disposal. The proceeds of a sale never change the average. Only purchases do.
That £833.33 gain joins your other gains for the year and is taxed at the rate that matches your income. See the UK crypto tax rates for 2025/26. You report the yearly total on the SA108 capital gains pages: how to fill in boxes 13.1 to 13.8.
Why this trips up most calculators
Plenty of tools, and most spreadsheets, quietly use FIFO (first-in-first-out) or ignore the 30-day rule entirely. That can give a very different, and wrong, number. Exchanges' own “tax” reports often aren't produced under HMRC's UK rules either, so you usually can't file them directly. CryptoCGT applies the same-day → 30-day → Section 104 order exactly, and reproduces HMRC's own worked examples to the pennyso you can see it's right.
Sources
- HMRC Cryptoassets Manual: pooling (CRYPTO22200 onwards)
- GOV.UK, HS284: Shares and Capital Gains Tax (the same-day and 30-day rules)
See your own number — free, no account
Drop your exchange CSV and read your full Capital Gains Tax figure on screen, with the Section 104 working shown. You only pay if you download the report.
Start free →This guide is information, not tax advice.Figures and thresholds are for the tax year shown (England, Wales & Northern Ireland; Scottish income tax bands differ). Rates and rules can change, and your own position may differ — check your circumstances and speak to an accountant before you file. CryptoCGT is an information tool, not a regulated tax adviser.