Section 104 Pooling: How UK Crypto Tax Works
For most UK individuals, cryptocurrency disposals are subject to Capital Gains Tax using a specific matching order that differs from FIFO: same-day acquisitions first, then acquisitions within the next 30 days, and then the Section 104 pool. This guide explains each rule with worked examples drawn from HMRC's published cryptoasset guidance and TCGA 1992.
If you live in the UK, you cannot choose FIFO for personal crypto disposals just because your exchange exports FIFO-style data. The UK matching rules are mandatory - you apply same-day, then 30-day, then Section 104 pool, in that order.
Let DYOR.tax calculate Section 104 for you. Upload your exchange CSV and select United Kingdom. The calculator applies same-day, 30-day and pool matching automatically, and maps the results to your SA108 Capital Gains Summary.
Try the UK Crypto Tax Calculator - free →The UK Matching Order
When you dispose of a fungible cryptoasset, HMRC requires you to match that disposal against acquisitions in a fixed order. You cannot choose which order to apply.
- Same-day rule (TCGA 1992 s.105): match the disposal against any acquisition of the same token type on the same calendar day, regardless of the order in which the transactions happened
- 30-day rule (TCGA 1992 s.106A): match the remaining disposal against any acquisition of the same token type made within the following 30 calendar days, taking earlier acquisitions first
- Section 104 pool (TCGA 1992 s.104): match the remainder of the disposal against the weighted average cost in the pool
Only after same-day and 30-day matching is exhausted does the Section 104 pool come into play. If a disposal is fully matched under the same-day or 30-day rules, the pool is unchanged for that disposal.
What Is the Section 104 Pool?
The Section 104 pool is a running record of all your holdings of a particular fungible token, tracked as a total quantity and a total pooled allowable cost. Every qualifying acquisition - one that is not matched under the same-day or 30-day rules - adds to both figures. Every disposal from the pool removes a proportionate share.
The allowable cost for a disposal from the pool is calculated as:
After the disposal, both pool quantity and pooled cost are reduced by the disposed amount. A separate pool is maintained for each fungible token type. BTC, ETH, SOL and every other fungible token each have their own pool.
The Same-Day Rule in Detail
Any acquisition of the same token type on the same calendar day as a disposal is matched against that disposal first - before the pool is considered. This applies regardless of whether the acquisition happened before or after the disposal in real time.
The same-day rule prevents you from crystallising a gain or loss simply by trading within a single day and then relying on the pool average. The acquisition matched under this rule never enters the Section 104 pool; it is consumed by the matching process.
Example: You hold 5 ETH in your pool at an average cost of £1,200. On the same day, you sell 2 ETH and buy 2 ETH at £2,000 each. The same-day rule matches the disposal against the same-day purchase. Proceeds for 2 ETH at £2,000 = £4,000. Allowable cost = £4,000 (same-day purchase price). Gain = nil. The pool is unchanged.
The 30-Day Rule in Detail
After same-day matching, any remaining unmatched disposal is matched against acquisitions of the same token made within the following 30 calendar days, taking the earliest acquisition first. This is the rule that prevents the "bed and breakfast" strategy.
Without the 30-day rule, you could sell an asset at a loss to crystallise it for tax purposes and then immediately repurchase at the same price, maintaining your economic position while booking a tax loss. The 30-day rule makes such repurchases count as the matching acquisition for the earlier disposal, preventing the loss from arising.
Example: You sell 1 BTC on 15 March for £50,000. Five days later on 20 March, you buy 1 BTC for £48,000. The 20 March purchase is within 30 days, so it is matched against the 15 March sale. The disposal gain or loss uses the £48,000 repurchase cost, not the pool average. The pool is unchanged by both transactions.
Worked Examples
Example 1 - Simple pool disposal
Starting position: Buy 1 BTC for £20,000. Later buy a further 1 BTC for £30,000.
Pool: 2 BTC, total pooled cost £50,000 (average £25,000 per BTC).
Disposal: Sell 0.5 BTC for £18,000. No same-day or 30-day acquisitions.
Allowable cost = £50,000 × (0.5 ÷ 2) = £12,500
Capital gain = £18,000 − £12,500 = £5,500
Pool after disposal: 1.5 BTC, pooled cost £37,500 (average unchanged at £25,000)
Example 2 - Same-day and 30-day matching in the same disposal
Starting position: 10 ETH pool, pooled cost £12,000 (average £1,200 per ETH).
Transactions:
- 1 August: sell 4 ETH for £8,000 total (£2,000 each)
- 1 August same day: buy 1 ETH for £1,900
- 10 August: buy 2 ETH for £4,600 total (£2,300 each)
Matching the 4 ETH disposal:
- Same-day: match 1 ETH against 1 August purchase at £1,900. Proceeds £2,000, cost £1,900. Gain £100
- 30-day: match 2 ETH against 10 August purchases at £4,600. Proceeds £4,000, cost £4,600. Loss £600
- Pool: remaining 1 ETH from pool (pool average cost £1,200). Proceeds £2,000, cost £1,200. Gain £800
Net gain: £100 − £600 + £800 = £300
Pool after disposal: 9 ETH, pooled cost £10,800. The same-day and 30-day matched tokens never entered or left the pool.
Example 3 - Crypto-to-crypto swap with fee
Starting position: ETH pool: 3 ETH, pooled cost £5,400 (£1,800 per ETH).
Transaction: Swap 1 ETH for USDC worth £2,500. Total platform and on-chain fees: £50.
HMRC accepts a 50/50 apportionment of a single fee between the disposal and the new acquisition.
- ETH disposal: proceeds £2,500, disposal fee £25, allowable cost from pool £1,800. Gain = £2,500 − £25 − £1,800 = £675
- USDC acquisition cost: £2,500 + £25 acquisition fee = £2,525 enters the USDC pool
ETH pool after swap: 2 ETH, pooled cost £3,600
Allowable Costs
When computing a capital gain or loss, the following can be included as allowable costs:
- Acquisition cost: the sterling amount paid to acquire the tokens, including exchange fees paid at the time of purchase
- On-chain transaction fees directly attributable to the acquisition
- Disposal fees: exchange fees and on-chain gas costs directly attributable to the disposal, deductible from proceeds
- Professional fees directly relating to the specific acquisition or disposal, such as contract costs or reasonable valuation costs
For crypto-to-crypto swaps, HMRC accepts a 50/50 apportionment of a single transaction fee between the disposal and the new acquisition, as illustrated in Example 3 above.
Costs already deducted as income expenses cannot also be claimed as CGT allowable costs. HMRC does not prescribe a single required sterling valuation source, but requires a consistent, evidenced approach. Spot prices from a reputable exchange or a specialist pricing service at the time of the transaction are commonly used.
NFTs Are Not Pooled
Non-fungible tokens are separately identifiable assets. HMRC's cryptoasset guidance states that NFTs are not pooled - the Section 104 pool, same-day rule and 30-day matching rules do not apply to NFTs in the same way as fungible tokens.
Each NFT is tracked on its own lot-specific basis, with its own distinct sterling acquisition cost. When you sell an NFT, the gain or loss is the difference between proceeds and the specific acquisition cost for that token. There is no pooling across different NFTs, even if they originate from the same collection.
How Income-Side Receipts Feed Your Cost Basis
When you receive tokens as a taxable income receipt - from staking, mining, or DeFi activity where the activity does not amount to a trade - and Income Tax is charged on the sterling value at receipt, that taxed amount becomes your acquisition cost for those tokens in the Section 104 pool.
This prevents double taxation. The amount already brought into income is not taxed again as a capital gain on the same value. Only any appreciation above the income basis gives rise to a further capital gain on disposal.
Example: You receive 100 tokens as a staking reward when the sterling market value is £2.50 each. You report £250 as miscellaneous income. Those tokens enter your Section 104 pool at a cost of £250. Six months later, you sell all 100 tokens for £400. Capital gain = £400 − £250 = £150. The £250 income is not taxed a second time.
Records You Need to Keep
HMRC requires records sufficient to calculate your gains accurately. Per HMRC's cryptoasset guidance, you should retain:
- Date and description of each acquisition and disposal
- Number of tokens in each transaction
- Sterling value at the date of each transaction, with evidence of the rate used
- Transaction fees paid
- Running pool balance for each token type - quantity and pooled cost after each transaction
- Wallet addresses and exchange account records as supporting evidence
Keep records for at least five years after the Self Assessment filing deadline for the relevant tax year. Capital losses must be claimed within four years of the end of the tax year in which they arose.