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Author: Admin | 2025-04-28
The cryptocurrency at the time you sold, traded, or disposed of it. Cost Basis refers to the amount it costs you to acquire the coin. To calculate your cost basis for a given cryptocurrency, you can use the shared pooled accounting method (more on this in the next section). How do I determine my cost basis?Calculating capital gains and losses from your crypto transactions becomes more complex when you have multiple transactions to account for. The UK requires a specific type of method for calculating the cost basis of your coins known as Shared Pool Accounting.With the shared pooled accounting method, you are essentially taking an average of the costs you have incurred to acquire your crypto. These averages can be used to calculate your cost basis per coin. Each cryptocurrency has its own shared pool for determining basis.Example:Let’s take an example of a crypto investor who buys Ethereum at multiple price points in a given year.Example: Emma’s Transaction HistoryIn May, Emma buys 1 ETH for £1,500.In August, Emma buys 1.5 ETH for £2,500.In October, Emma sells 1 ETH for £3,000.In this example, Emma has a total pool of 2.5 ETH prior to her October sale. To calculate her cost basis on a per ETH basis, we need to average out her total costs.Her allowable costs for her total pool of 2.5 ETH are £4,000 (May buy of £1,500 plus August buy of £2,500). We then simply divide her total allowable costs by her total pool of ETH. £4,000 / 2.5 ETH = £1,600/ETHAs you can see, Emma’s cost basis per ETH in her shared pool is £1,600.We can use the equation from above to calculate Emma’s capital gain from the sale of her 1 ETH in October. Fair Market Value - Cost Basis = Gain/Loss £3,000 - £1,600 =
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