CRYPTO22257 - Cryptoassets for individuals: Capital Gains Tax: pooling examples: example 7 - disposal of tokens to acquire different tokens (‘crypto-to-crypto' exchange)
Most types of tokens need to be purchased using another token. This means that a transaction may simultaneously affect two section 104 pools. This example illustrates how a transaction can affect two section 104 pools simultaneously.
Elina holds 100,000 token G in a section 104 pool. She spent a total of £300,000 acquiring them, which is her pooled allowable cost.
Elina enters into the following transactions:
- 31 August 20XX – acquisition of 10,000 token H (with a value of £3,200) for 1,000 token G (with a value of £3,200)
- 31 August 20XX – disposal of 5,000 token H (with a value of £1,700) for 600 token G (with a value of £1,920)
- 31 August 20XX – acquisition of 5,000 token H (with a value of £1,650) for 550 token G (with a value of £1,760)
- 4 September 20XX – disposal of 2,000 token H (with a value of £560) for 180 token G (with a value of £558)
- 16 September 20XX – acquisition of 4,000 token H (with a value of £1,080) for 400 token G (with a value of £1,080)
- 27 October 20XX – disposal of 12,000 token H (with a value of £2,400) for 900 token G (with a value of £2,430)
Elina entered into two acquisitions of token H on 31 August 20XX. These acquisitions are treated as a single acquisition of 15,000 token H on that date. That single acquisition is then matched as far as possible with the disposal of 5,000 token H on the same date. The remaining token H that were acquired go into a section 104 pool of token H.
Elina has also entered into two disposals of token G on 31 August 20XX. These two disposals are treated as a single disposal of 1,550 token G on that date. That single disposal is matched as far as possible with the acquisition of 600 token G on the same date. The disposal is then matched to the acquisition of 180 token G on 4 September 20XX. The remaining part of the disposal comes from the section 104 pool of token G.
Elina’s disposal of 2,000 token H on 4 September 20XX is matched with the acquisition of 4,000 token H on 16 September 20XX as the acquisition takes place within 30 days of the disposal.
Elina’s acquisition of 180 token G on 4 September 20XX goes into the section 104 pool for token G.
Elina’s disposal of 400 token G on 16 September 20XX comes from the section 104 pool of token G.
Elina’s disposal of 12,000 token H on 27 October 20XX comes from the section 104 pool for token H.
Elina’s acquisition of 900 token G on 27 October 20XX goes into the section 104 pool for token G.
Elina will need to work out her gains/losses on the three disposals as follows:
31 August 20XX – disposal of token G
Consideration | Value of 15,000 token H acquired | £4,850 |
---|---|---|
Less allowable costs – same day (600 token G) | Value of 5,000 token H disposed of on 31/08/20XX | (£1,700) |
Less allowable costs – 30 day (04/09 – 180 token G) | Value of 2,000 token H disposed of on 04/09/20XX | (£560) |
Less allowable costs – S104 | £300,000 x 770 / 100,000 = £2,310 | (£2,310) |
Gain | £280 |
31 August 20XX – disposal of token H
Consideration | Value of token G acquired | £1,920 |
---|---|---|
Less allowable costs – same day (5,000 token H) | (£3,200 + £1,760 = £4,960) x 5,000 / 15,000 | (£1,653) |
Gain | £267 |
4 September 20XX – disposal of token H
Consideration | Value of token G acquired | £558 |
---|---|---|
Less allowable costs – 30 day (16/09 – 2,000 token H) | £1,080 x 2,000 / 4,000 | (£540) |
Gain | £18 |
16 September 20XX – disposal of token G
Consideration | Value of token H acquired | £1,080 |
---|---|---|
Less allowable costs – S104 | £297,690 x 400 / 99,230 | (£1,200) |
Loss | (£120) |
27 October 20XX – disposal of token H
Consideration | Value of token G acquired | £2,430 |
---|---|---|
Less allowable costs – S104 | (£3,847) | |
Loss | (£1,417) |
The section 104 pools are as follows:
Section 104 pool for token G
Date | Quantity of token G | Pooled allowable costs |
---|---|---|
Opening balance | 100,000 | £300,000 |
31/08/20XX - Disposal of 770 tokens | (770) | (£2,310) |
Balance at 31/08/20XX | 99,230 | £297,690 |
16/09/20XX - Disposal of 400 tokens | (400) | (£1,200) |
Balance at 16/09/20XX | 98,830 | £296,490 |
27/10/20XX - Acquisition of 900 tokens | +900 | +£2,400 |
Balance at 27/10/20XX | 99,730 | £298,890 |
Section 104 pool for token H
Date | Quantity of token H | Pooled allowable costs |
---|---|---|
31/08/20XX - Acquisition of token H | +10,000 | +£3,307 |
Balance at 31/08/20XX | 10,000 | £3,307 |
04/09/20XX - Acquisition of 2,000 tokens | +2,000 | +£540 |
Balance at 04/09/20XX | 12,000 | £3,847 |
27/10/20XX - Disposal of 12,000 tokens | (12,000) | (£3,847) |
Pool ceases | 0 | £0 |
This shows that the principles in the previous examples apply in the same way where the transaction involves the disposal of one type of token to acquire a different type of token. The important thing to remember in this situation is that every acquisition will involve a corresponding disposal that needs to be computed.