To calculate a UK crypto gain, subtract the pooled average cost of the coins you sold from what you got for them. HMRC uses 'share pooling', not first-in-first-out — plus a same-day and 30-day rule that trips everyone up. Here's the method, worked through.
Important Risk Warning
This is not financial advice. Cryptocurrency investments are highly volatile. The value of your investment can go down as well as up, and you could lose all the money you invest. Don't invest unless you're prepared to lose all the money you put in.
To calculate a crypto gain in the UK, you subtract the cost of the coins you disposed of from the sterling proceeds — but the cost isn't simply what you paid for those specific coins. HMRC makes you "pool" all your holdings of each coin into a single average cost, then apply that average when you sell. On top of that sit two ordering rules — the same-day rule and the 30-day rule — that override the pool in specific cases. Get the pooling right and crypto tax stops being scary; get it wrong and your figures are off.
Most people assume it's first-in-first-out, like a queue. It isn't, and that assumption produces wrong numbers on nearly every return I've seen attempted from scratch.
Share pooling means all units of the same cryptoasset are treated as one combined holding with a single average cost — the "Section 104 pool." Every time you buy, you add the cost to the pool and increase the number of coins. When you sell, you use the pool's average cost per coin for the amount you're selling, and the pool shrinks proportionally.
Say you buy 1 BTC for £20,000, then later 1 BTC for £30,000. Your pool is 2 BTC costing £50,000 — an average of £25,000 each. Sell 1 BTC for £40,000 and your cost is £25,000 (the pool average), giving a £15,000 gain — not £20,000 (if you'd wrongly assumed you sold the first, cheaper coin) or £10,000 (the second). The pool average is the number that matters.
They're two exceptions that take priority over the pool to stop people "bed-and-breakfasting" — selling and rebuying to reset a cost basis. The order HMRC applies is strict:
The 30-day rule is the sneaky one. If you sell Bitcoin to crystallise a loss, then rebuy within 30 days, HMRC matches the sale to the rebuy — not the pool — which can wipe out the loss you were trying to bank. It's designed to block exactly that manoeuvre. Our tax losses guide explains how to claim losses without falling foul of it.
Work out proceeds, subtract allowable costs using the matching rules, then apply your allowance. Here's the sequence for any disposal:
Remember every disposal counts — selling for pounds, swapping coin to coin, spending, and gifting to non-spouses. A year of active trading can mean hundreds of these calculations, which is exactly why so many people use software. Our best crypto tax software guide covers tools that do the pooling automatically.
You can, but for anything beyond a handful of trades, tax software or an accountant will save hours and errors. The pooling and 30-day matching are fiddly to apply consistently across many transactions, and a single misordered trade throws off everything after it. Reputable crypto tax tools import your exchange history and apply HMRC's rules automatically, producing a report you can drop into Self Assessment.
That said, understanding the method matters even if software does the sums — because you need to sanity-check the output and know why a number looks the way it does. And under the CARF data-sharing rules, HMRC is receiving your exchange data, so your figures need to reconcile. Our how to file crypto Self Assessment guide covers the reporting step, and our capital gains guide the broader rules.
Does the UK use FIFO for crypto gains? No. HMRC uses share pooling (a Section 104 pool of average cost), not first-in-first-out. Coins of the same type are combined into one holding with an average cost per unit, subject to the same-day and 30-day rules that take priority.
What is the 30-day rule for crypto? If you sell a coin and buy the same coin back within 30 days, HMRC matches the sale to that repurchase rather than your pool. It stops people selling to bank a loss and immediately rebuying — the "bed-and-breakfast" trick.
How do I work out my crypto cost basis? Pool all purchases of a coin into a total cost and total quantity, giving an average cost per unit. When you sell, that average (after applying same-day and 30-day rules) is your cost basis for the amount sold.
Are transaction fees deductible from crypto gains? Yes. Allowable costs such as exchange fees on buying and selling can be added to your cost or deducted from proceeds, reducing the gain. Keep records of the fees for each transaction.
Do I need to calculate gains on crypto-to-crypto swaps? Yes. Swapping one coin for another is a disposal, so you calculate a gain using the pooled cost of the coin you gave up and its market value at the swap. No pounds need to be involved for tax to apply.
Pull your full transaction history for the tax year and, if it's more than a dozen trades, run it through reputable crypto tax software rather than a spreadsheet — the pooling and 30-day rules are too error-prone by hand. Understand the method well enough to sanity-check the result, add your fees to reduce the gain, and apply the £3,000 allowance last. This isn't tax advice; for a complex position, a crypto-savvy accountant is money well spent.
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