What sets the United Kingdom apart from almost every other major jurisdiction is that it does not use FIFO, LIFO, or HIFO for crypto at all. Instead, every unit of an identical asset a holder owns is aggregated into a single Section 104 pool carrying one blended average cost. A disposal does not consume a particular lot; it draws down a fraction of the pool at the pool's average basis. The question "which coins did I sell?" has no answer in the UK system — there is only the pool.
The Section 104 pool: one average cost per asset
The pool works by continuous averaging. Each acquisition of an asset adds its quantity and its cost into the pool, which raises or lowers the running average. Each disposal removes units at the current average cost and reduces the pool proportionally.
The consequences are worth stating plainly:
- There is no lot selection. A holder cannot choose to sell the cheapest or the most expensive units to manage the gain — every disposal is measured against the same blended average.
- The average moves with every buy. A large purchase at a high price lifts the pool cost for every subsequent disposal, not just the units bought.
- Identical assets pool together; different assets do not. All of a holder's ETH forms one pool; ETH and a wrapped variant are assessed on their own facts.
This is closer to a weighted-average system than to FIFO, but it is not a simple arithmetic average either, because two matching rules sit on top of it.
The two matching rules: same-day, then 30-day
Before a disposal reaches the pool, HMRC applies two rules in order:
- The same-day rule. A disposal is first matched against any acquisitions of the same asset made on the same day.
- The 30-day rule. Any remaining disposal is then matched against acquisitions of the same asset in the following 30 days, before it touches the Section 104 pool.
The 30-day rule is often called bed and breakfasting, and it functions as the UK's wash-sale analogue. A holder who sells at a loss and rebuys the same asset within thirty days does not get to set that loss against the pool — the disposal is matched against the rebuy instead, neutralising the harvest. To realise a loss cleanly, a UK holder generally has to stay out of the asset for more than thirty days and accept the market exposure that creates. HQ Wealth applies the Section 104 pool with same-day and 30-day matching built in, so a rebuy inside the window is matched as HMRC requires rather than mistaken for a clean loss.
Allowances, swaps, and the rates
Two annual allowances shape what is actually taxable:
- The annual CGT exemption is £3,000 for the 2024/25 year — gains below it are not taxed.
- The dividend allowance is £500, covering a slice of dividend income before tax applies.
As in most jurisdictions, a crypto-to-crypto swap is a taxable disposal: trading one token for another is a disposal of the first at its market value, even though no sterling changes hands. That disposal runs through the same-day, 30-day, and pool logic like any other.
The calendar and the forms
The UK tax year is unusual — it runs from 6 April to 5 April, not the calendar year. Returns are filed under Self-Assessment, with an online filing deadline of 31 January following the end of the tax year.
The relevant pages are:
- SA108 — the capital gains summary, where crypto disposals are reported.
- SA106 — for foreign income and gains.
- SA100 — the main return the supplementary pages attach to.
Tax-advantaged wrappers sit outside this gain calculation entirely: an ISA (£20,000 annual subscription), a SIPP, and the Lifetime ISA each shelter qualifying holdings under their own rules. HQ Wealth produces SA108-style lines from the pooled records in a UK tax pack, so the figures reported trace back to the pool and its matching history rather than a method the UK does not recognise.
Why the pool demands good records
It is tempting to think the pool's averaging makes record-keeping easier — there are no lots to track, after all. The opposite is true. Reconstructing a correct pool means capturing every acquisition and disposal in date order, applying same-day and 30-day matching at each step, and carrying the running average forward without error. A single missed acquisition shifts the average for every disposal that follows it. The pool is simple to describe and unforgiving to rebuild by hand, which is exactly why it should be maintained continuously rather than assembled at year end — and why a holder with a non-trivial history is well served checking the result against a professional in the jurisdiction.
Takeaway: The UK replaces lot selection with a single Section 104 pool at average cost, then layers same-day and 30-day matching on top — the latter acting as a wash-sale analogue. There is no FIFO or LIFO to choose, the tax year runs 6 April to 5 April, and the pool only works if every acquisition is captured in order.