Your gain is not simply what you sold minus what you paid. HMRC has three specific rules that determine which purchase you can use as your cost basis — and they apply in a strict, non-negotiable order. Use the wrong method and your figures are wrong, regardless of how carefully you calculated them.
Why these rules exist
Before these rules existed, investors could sell an asset to crystallise a gain or loss, immediately repurchase it, and manipulate their tax position. The matching rules close that loophole. They apply to all cryptoassets in the UK — the same rules that apply to shares.
Rule 1: Same-day acquisitions
If you buy and sell the same crypto on the same day, the sale is matched against that day's purchase first. This prevents the “same-day wash” — selling at a price and buying back at the same price to create an artificial zero-gain disposal.
Example
You own 1 BTC (bought in 2021 for £20,000). On 15 March 2024 you sell 1 BTC at 10am for £45,000, then buy 1 BTC at 3pm for £44,800. The sale is matched against the afternoon purchase (£44,800), giving a gain of £200 — not the £25,000 gain you would have calculated using your 2021 cost.
Rule 2: The 30-day rule (bed and breakfasting)
If you sell crypto and repurchase the same asset within the 30 days following the sale, the sale is matched against that later repurchase — not your historic holding. This prevents selling to crystallise a loss (or gain) and immediately rebuying.
Example
You sell 1 ETH on 1 March (proceeds £3,000). You buy 1 ETH on 20 March (cost £2,800). The 1 March sale is matched against the 20 March repurchase. Your gain is £200 — not the much larger gain you would calculate using your original pool average.
The 30-day rule runs forwards from the sale — not backwards. It catches repurchases in the 30 days after the sale. Purchases made before the sale (other than same-day) are not affected.
Rule 3: The Section 104 pool
Everything not caught by rules 1 or 2 comes from the Section 104 pool — a running average of all units you have ever held. Every time you buy, the cost goes into the pool and the average updates. Every time you sell, the proportionate average cost comes out.
Example
You bought 1 BTC at £20,000 in 2021 and 1 BTC at £40,000 in 2023. Pool: 2 BTC, total cost £60,000, average £30,000 per BTC. In 2024 you sell 1 BTC for £45,000 (no same-day or 30-day repurchase). Cost basis: £30,000. Gain: £15,000.
The pool accumulates from your very first purchase of an asset. Missing historical data does not just affect old years — it makes your pool average wrong for every future calculation.
Frequently asked questions
Can I choose FIFO or specific identification instead of these rules?
No. HMRC's matching rules are mandatory for UK crypto tax. FIFO (first-in, first-out) is used in the US and some other countries but not the UK. Using FIFO will produce incorrect results and could trigger an HMRC enquiry if the figures do not match what the exchange reports.
What if I sold crypto and did not rebuy within 30 days — does the 30-day rule still apply?
No. The 30-day rule only applies if you repurchase the same asset within 30 days of the sale. If you sell and do not buy back (or buy back more than 30 days later), the sale is matched against your Section 104 pool using Rule 3.
Does the 30-day rule apply if I buy a different crypto?
No. The 30-day rule only applies to repurchases of the same asset. Selling BTC and buying ETH within 30 days does not trigger the rule — they are treated as separate assets. But selling BTC and buying BTC within 30 days does trigger it.
How does the pool work if I have bought across many exchanges?
All purchases of the same asset are pooled together regardless of which exchange they were made on. Your BTC pool includes every BTC you have ever bought on Coinbase, Binance, Kraken — anywhere. The average cost is across all of them.
What happens to my pool when I transfer crypto to a different wallet?
Transfers between your own wallets are not disposals and do not affect your Section 104 pool. The cost basis remains unchanged. Only buying and selling affects the pool calculation.
Do the matching rules apply to NFTs?
No. NFTs are unique assets and cannot be pooled. Each NFT has its own individual cost basis equal to what you paid for it. The Section 104 pooling rules apply to fungible tokens (BTC, ETH, etc.) where each unit is identical.
General information only. HMRC guidance can change. Consult a qualified adviser.