Accounting

Selling from Pools of Cryptoassets (UK)

We pool cryptoassets when we group them according to what they are. To determine the cost of a particular cryptoasset, we use average cost, exactly as we do for shares when we buy at different times and at different prices. We use average cost to work out taxable gains BUT please note the exceptions below the following example.

The following is a simplistic example of a sale of ETH. It ignores gas fees.

01 July: I buy 2 ETH at £1,700 each. Total cost £3,400.
01 August: I buy 4 ETH at £1,300 each. Total cost £5,200.

I have 6 ETH costing a total of £8,600, giving an average cost of £1,433 per ETH.

If I sell 1 ETH for £1,600, my taxable gain will be £167. This is calculated by deducting the average pool cost of 1 ETH from the sale price.

Exceptions

Average cost does not apply if:

  1. a sale occurs on the same day cryptoassets are bought, and
  2. a sale occurs up to 30 days before a purchase is made.

What the above means is that in order to accurately calculate taxable gain, we first match the sale against same day purchase, then against any purchase made up to 30 days after the sale. Any overflow is then matched against the average cost of the pool.

About Phoenix

Accountant | Tax Specialist | Dreamy Entrepreneur | Blogger

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