Quick answer
HMRC requires all units of the same crypto you own to be treated as one averaged pool — not individual lots.
Tax Filing
United Kingdom
Pooling Rules
HMRC's method of averaging the cost of all identical cryptocurrency holdings into a single pool to calculate gains on disposal.
United KingdomUnderstanding Pooling Rules on crypto
Under HMRC's Section 104 pooling rules, every unit of the same cryptocurrency you own is treated as part of a single, indistinguishable pool rather than as individual lots. When you buy more of the same token, the new cost is added to the pool and a new average cost per unit is calculated. When you sell, you use that average cost — not the price of any specific purchase — to work out your gain or loss. Two exceptions take priority over the pool: the same-day rule and the 30-day bed-and-breakfasting rule, both designed to prevent artificial loss creation.
Under HMRC's Section 104 pooling rules, every unit of the same cryptocurrency you own is treated as part of a single, indistinguishable pool rather than as individual lots. When you buy more of the same token, the new cost is added to the pool and a new average cost per unit is calculated. When you sell, you use that average cost — not the price of any specific purchase — to work out your gain or loss. Two exceptions take priority over the pool: the same-day rule and the 30-day bed-and-breakfasting rule, both designed to prevent artificial loss creation.
What this means for your crypto activity
Pool average is mandatory
You cannot choose which specific coins you're selling — the pool average is mandatory, unlike HIFO available in the US.
Purchases change average cost
Every new purchase changes your average cost per unit across the entire holding.
30-day bed-and-breakfast rule
Selling crypto and rebuying the same token within 30 days will not crystallise a tax loss.
One pool per token
HMRC treats all units of the same token as one pool regardless of which wallet or exchange they are on.
Swaps are disposals
Crypto-to-crypto swaps are disposals from one pool and an acquisition into another.
- You cannot choose which specific coins you're selling — the pool average is mandatory, unlike HIFO available in the US.
- Every new purchase changes your average cost per unit across the entire holding.
- Selling crypto and rebuying the same token within 30 days will not crystallise a tax loss.
- HMRC treats all units of the same token as one pool regardless of which wallet or exchange they are on.
- Crypto-to-crypto swaps are disposals from one pool and an acquisition into another.
Seeing it in action
Example scenario
Sophie buys 2 ETH at £1,200 each (pool: £2,400, avg: £1,200), then 1 more at £900 (pool: £3,300, avg: £1,100), then 1 at £1,600 (pool: £4,900, 4 ETH, avg: £1,225). When she sells 1.5 ETH at £2,800 each (£4,200), her allowable cost is 1.5 × £1,225 = £1,837.50 and her gain is £2,362.50. She cannot claim the cheapest or most expensive ETH — only the pool average applies.
How this works across jurisdictions
- United Kingdom
Under Section 104, matching priorities require disposals to be paired first with acquisitions on the same day, second with acquisitions made within the following 30 days (Bed-and-Breakfasting), and only then against the collective, averaged share pool.
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