Capital Gains Tax on Crypto
Understand when CGT is triggered, current rates and annual exemptions, plus the share-pooling and bed-and-breakfasting rules.
Capital Gains Tax on Crypto
Capital Gains Tax (CGT) is the primary tax that applies to most crypto transactions for individuals.
When CGT Applies
CGT is triggered on any disposal of crypto assets. A disposal includes:
- Selling crypto for fiat currency (GBP, USD, EUR)
- Exchanging one crypto for another (e.g. ETH → BTC)
- Exchanging crypto for a stablecoin (e.g. ETH → USDT)
- Using crypto to pay for goods or services
- Gifting crypto to another person (except spouse/civil partner)
- Transferring beneficial ownership via DeFi (see Modules 4–6)
CGT Rates (2024-25 Tax Year Onwards)
| Rate Band | Rate |
|---|---|
| Basic rate taxpayer | 10% |
| Higher/additional rate taxpayer | 20% |
Annual Exempt Amount
| Tax Year | Annual Exempt Amount |
|---|---|
| 2023-24 | £6,000 |
| 2024-25 onwards | £3,000 |
The AEA has been significantly reduced from historic levels. With only £3,000 of tax-free gains, even relatively modest crypto portfolios may produce taxable gains.
Share Pooling Rules (Section 104, TCGA 1992)
Crypto assets of the same type are pooled together. The cost basis is the average cost of all tokens in the pool. This is called a "Section 104 pool."
Example: If you bought 1 ETH at £1,000 and another 1 ETH at £2,000, your pool contains 2 ETH with an average cost of £1,500 each. If you sell 1 ETH for £2,500, your gain is £1,000 (£2,500 − £1,500).
Anti-Avoidance Rules
Two rules prevent investors from exploiting the pooling system:
- Same-day rule: If you sell and buy the same token on the same day, the acquisition cost is matched to the same-day purchase first (not the pool).
- Bed and breakfasting rule (30-day rule): If you sell and repurchase the same token within 30 days, the acquisition cost is matched to the repurchase. This prevents "washing" — selling to crystallise a gain or loss and immediately rebuying.
TCGA 1992, s.104 — Share pooling.
TCGA 1992, s.106A — Bed and breakfasting rule.
HMRC CRYPTO22200 — Section 104 pooling for crypto.
Explain Like I'm 5
When you sell or swap your digital coins, the government wants a small share of any profit you made. You get a little bit of profit for free each year, but after that you have to pay. And if you sell some coins and buy them straight back to try to be sneaky, the government has rules to stop that. They also mix all your same-type coins together in one big jar to work out what you paid on average.
Key Takeaways
- Any disposal of crypto — selling, swapping, spending, or gifting — triggers CGT.
- CGT rates are 10% (basic rate) and 20% (higher rate). The Annual Exempt Amount is £3,000 from 2024-25.
- The Section 104 pool averages your cost basis across all tokens of the same type.
- Same-day and 30-day bed-and-breakfasting rules prevent tax-loss washing.
- Transfers to a spouse or civil partner are not disposals — they happen at no gain/no loss.
CoreFi automatically calculates your Section 104 pools and crypto gains using HMRC-compliant rules.
Track your crypto gainsEducational only - not financial advice