Hi Luna, for a buy-and-hold investor like you, this falls squarely under Capital Gains Tax (CGT), not Income Tax. Your four questions map neatly onto how HMRC treats cryptoassets:
1. What counts as a disposal
You trigger a disposal - and a potential gain or loss - when you sell tokens for pounds, swap one crypto for another, spend crypto on goods or services, or give tokens away. Gifts to a spouse or civil partner (or to charity) are the main exception.
2. The annual exempt amount and pooling
Yes on both counts. For 2026/27 the CGT annual exempt amount is £3,000 per person. You only pay CGT on your total gains for the tax year above that figure, after deducting any allowable losses. With gains of a few thousand pounds, part or all may fall within the allowance - but you still need to work the numbers out properly.
And yes, you must pool costs. Each type of token (say, Bitcoin and Ethereum separately) sits in its own cost pool: every purchase adds to the pool, and every sale takes a proportionate slice of the pooled cost off the proceeds. So your two batches of the same coin get averaged together. Two wrinkles to know: tokens bought on the same day as a sale, or within 30 days after a sale, are matched against that sale first under the same-day and 30-day (bed-and-breakfast) rules instead of going straight into the pool. Exchange transaction fees and similar costs are deductible as allowable costs.
The CGT rate then depends on your income: for 2026/27 it is 18% on gains within your basic-rate band and 24% above it.
3. Records HMRC expects
HMRC is explicit here. For each pool of tokens you must keep, per transaction: the type of token, the date, the number disposed of, the number left, the value in pounds sterling, bank statements, and the pooled costs before and after each disposal. Exchange-provided reports are useful, but HMRC warns they are not tax calculations and do not track pooled costs - you must keep your own records.
4. Reporting and deadlines
Report the gains on your Self Assessment return (the capital gains pages) - the online filing and payment deadline is 31 January following the tax year. Alternatively, HMRC's CGT real-time service lets you report and pay in-year rather than waiting for the return. If you think you underpaid in an earlier year, there is a dedicated cryptoasset disclosure service.
One last note: if you later get into frequent trading, staking rewards or DeFi yields, the Income Tax side can kick in - but for pure buy, hold, sell, it is CGT.
