If you hold cryptocurrency in the UK — whether on an exchange like Coinbase, a hardware wallet, or a self-custody wallet like MetaMask — you are almost certainly liable for Capital Gains Tax (CGT) when you dispose of it. HMRC has published detailed guidance making clear that crypto assets are treated as a form of property, not currency, meaning every sale, swap, gift, or spend can trigger a taxable event. Understanding how to calculate your gain or loss correctly is not optional; it is a legal requirement. This article walks you through exactly how HMRC’s rules work in practice, how the pooling method applies across wallets and exchanges, and what you need to do before the 2025–26 self-assessment deadline.

How HMRC Classifies Crypto Assets for Tax Purposes

HMRC’s position on cryptocurrency taxation is set out in its Cryptoassets Manual (CRYPTO10000 onwards), published on GOV.UK. The guidance confirms that most retail holders own what HMRC calls “exchange tokens” — assets like Bitcoin and Ether — and that these are subject to Capital Gains Tax rather than Income Tax when disposed of, unless they are received as employment income, mining rewards, or staking rewards in certain circumstances.

A disposal under HMRC’s rules includes:

Simply moving crypto between your own wallets — for example, from Coinbase to a Ledger hardware wallet — is not a disposal and does not create a taxable event, provided you can demonstrate both wallets belong to you.

The Section 104 Pool: HMRC’s Averaging Method

The core mechanic for calculating crypto capital gains in the UK is the Section 104 pool, named after Section 104 of the Taxation of Chargeable Gains Act 1992. HMRC requires you to pool all units of the same type of token — across every wallet and exchange you use — into a single average-cost pool per token.

How the pool works

Every time you acquire a token, you add the number of units and the sterling cost (including fees) to the pool. The pool tracks a running total of units and a running total of allowable costs. Your average cost per unit is the total pooled cost divided by the total pooled units.

When you dispose of units, you calculate your gain as:

Example calculation

Suppose you bought 1 ETH for £1,000 in January and another 1 ETH for £3,000 in June. Your Section 104 pool holds 2 ETH at a total cost of £4,000 — an average of £2,000 per ETH. If you sell 1 ETH for £2,800 in November, your gain is £2,800 minus £2,000 = £800.

The 30-Day Same-Day and Bed-and-Breakfast Rules

HMRC applies two anti-avoidance rules that take priority over the Section 104 pool. These prevent taxpayers from selling crypto at a loss and immediately rebuying to manufacture an artificial loss.

Same-day rule

If you buy and sell the same token on the same day, the acquisition is matched against the disposal first, before applying the Section 104 pool. The cost used is the cost of the same-day acquisition.

30-day rule (Bed and Breakfasting)

If you dispose of a token and then reacquire the same token within 30 days, the disposal is matched against the reacquisition cost first. This applies even if the repurchase is on a different exchange or in a different wallet. HMRC’s Cryptoassets Manual explicitly references this rule at CRYPTO22200.

The practical implication: if you sell Bitcoin at a loss in December and rebuy within 30 days hoping to crystallise that loss for your tax return, HMRC will not allow the loss to stand as reported — the cost basis shifts to the repurchase price.

Calculating Gains Across Multiple Wallets and Exchanges

One of the most common sources of confusion for UK crypto holders is that the Section 104 pool applies globally across all your wallets and exchanges. HMRC does not treat your Binance account and your MetaMask wallet as separate pools for the same token. All your ETH, wherever it sits, belongs to a single ETH pool.

Record-keeping requirements

HMRC requires you to keep records of:

For GBP valuation, HMRC accepts the use of a “consistent and reasonable” exchange rate. Using a reputable price feed such as CoinGecko or the exchange’s own historical price data at the time of the transaction is generally considered acceptable.

DeFi, NFTs, and wrapped tokens

HMRC’s guidance has been extended to cover DeFi activity. Providing liquidity to a protocol and receiving LP tokens in return may constitute a disposal of the underlying assets, depending on whether beneficial ownership transfers. HMRC published a policy paper on DeFi lending and staking in 2022 and updated its Cryptoassets Manual accordingly. Wrapped tokens (e.g. WBTC) are generally treated as a separate asset from the underlying token, meaning wrapping Bitcoin into WBTC can be a taxable disposal.

The Annual CGT Allowance and Tax Rates for 2025–26

For the 2025–26 tax year, the Annual Exempt Amount for Capital Gains Tax is £3,000, reduced from £6,000 in 2023–24 and £12,300 in prior years. This means only gains above £3,000 are taxable.

CGT rates on crypto for 2025–26:

These rates changed in the October 2024 Autumn Budget, which removed the previous 10%/20% rates for non-residential property assets including crypto. Confirm current rates directly with HMRC’s official guidance before filing.

Reporting Crypto Gains to HMRC

If your total crypto gains exceed £3,000, or if your total disposal proceeds exceed £50,000 in a tax year, you are legally required to report them via Self Assessment. The deadline for online self-assessment for the 2025–26 tax year is 31 January 2027.

You can also use HMRC’s Real Time Capital Gains Tax Service to report and pay CGT without a full Self Assessment return, though this is typically used for simpler cases.

Crypto gains are reported in the SA108 Capital Gains Summary supplementary pages. If you use third-party software such as Koinly, CoinTracker, or Accointing, ensure the software applies UK-specific rules — including the Section 104 pool and the 30-day rule — not US FIFO or LIFO methods, which HMRC does not accept.

What This Means for You

Calculating crypto capital gains under UK HMRC rules requires you to maintain detailed records of every transaction across every wallet and exchange, apply the Section 104 pool consistently, and observe the same-day and 30-day matching rules before calculating any loss. The reduced Annual Exempt Amount of £3,000 means even modest gains are now reportable for many holders.

The rules are detailed but not unknowable. Getting the calculation right from the start is far less costly than an HMRC enquiry later.