UK CGT Same Day Pooling (HMRC)

[JohnH]

Hi Guys,

According to the UK HMRC crypto assets manual (see: CRYPTO22200 - Cryptoassets Manual - HMRC internal manual - GOV.UK) the “Same day rule” says tokens (either acquired or disposed of on the same day) should be treated as “single” transaction(s) and would require 1 calculation only to work out the gain/loss.

Have attached some images of some test transactions that I added manually to Koinly. The way Koinly has worked out the cost basis does not seem to match the HMRC rules… unless I have missed something obvious, could you please explain this discrepancy?

This is “rule 1” of the HMRC asset matching CGT rules… so if this is not 100% correct on your system then my confidence in Koinly is severely reduced.

Please advise on this possible issue… as the cost basis should be £150, with a £150 profit.

Note: My settings are for the UK and Shared Pool / Individuals.

Regards,
John

[Adrian_Mann]

Can some one from Koinly support please respond to this as if the calculation is incorrect it has quite serious implications to all your UK users?

Adrian

[Petur_Koinly]

Hi guys,

Thanks for reporting this. Same day transactions were being handled using FIFO but have now been updated so that they are treated as a single transaction as per the updated examples on HMRC’s website. This should only affect people that bought/sold the same asset on the same day at very different prices (like in your example) and did not sell all of those assets in the following 30 days.

You will now see a $0 value on most deposits on the same day and a higher value on the first deposit (since all deposits are pooled into a single txn). We are rolling the change out gradually and you will receive an email from us if your gains are affected. You can also apply the new changes to your account manually by changing your cost basis method from Share Pooling [Legacy] to Share Pooling / Individuals.

Thanks

[Adrian_Mann]

Petur,

Thanks for getting the Koinly team to fix this. As you mentioned above it made very little difference to the calculation as although I have done a fair bit of buying and selling the same day the price wasn’t dramatically different within that one day.

[JohnH]

Hi Petur,

Thanks very much for looking into this and updating the system to handle same day pooling.

Regards,
John

[Danvet]

Im confused by this. is this likely to increase gains or reduce them overall?

I have done 4 years on jointly and have paid for plans each year, now im worried its calculated all my taxes wrong when I have tried to be as consistent as possible and have spent days and days and days inputting all my transaction and information etc.

Mine is still showing on ‘‘Shared Pool (LEGACY)’’ and I’m real worried changing it will throw up costs of ‘‘errors’’ ‘‘costing errors’’ etc which would create one almighty headache.

I’ve reached out on chat to see if there’s anyway possible my account can be duplicated as such so I can play around with it on there so I don’t lose or mess up everything I have already done.

Also confused by the comment ‘‘We are rolling the change out gradually and you will receive an email from us if your gains are affected.’’ Have never received an email but still on Legacy?

[Adrian_Mann]

It made very little difference to my calculation (less than a few pounds) For it to make a big difference you would have to have bought coins at different prices and then sold them the same day and you would also need a big difference in price between the purchases.

[Danvet]

Did you have ALOT of transactions? only thing I worry about is it throwing up all kinds or random ‘cost’ errors etc over the last 4 years just as I have everything sorted.

Any coins I bought and sold the same day where in bulk, ie id buy a bunch of X then sell all that X, then buy X again then sell all that X again.

I don’t think I ever bought X…then bought more X…then sold ALL the X, if that makes sense?

[Adrian_Mann]

Depends what you call a lot but had over a 1000 trades in the last year. I thought it might make a difference as I did a lot of trading the day the market crashed last may but it didn’t.

The scenario you described might make a difference using FIFO instead of a one day pool for the cgt. I can’t see it creating any errors apart from getting a different cgt number for the year.

It’s easy enough to go online and resubmit you self assessment tax return with new values if there is a big difference (I’ve done this in the past for a mistake non crypto related). But if value was less than £50 I wouldn’t bother

[rpscullion]

My concern here is how it will affect previous years tax returns? If the method changes then suddenly the tax return I filed last year will be wrong, even if by a small amount, and I could end up under or overpaying tax overall? How do I deal with this? As I understand it there is still no way to ‘freeze’ your report for previous years.

[Adrian_Mann]

I took the gamble and just got gains recalculated. Luckily for me the difference in previous years was less than a few pounds so not worth the hassle or worry of correcting the tax return.

To be honest I think if you are submitting crypto gains on your tax return you are unlikely to be bothered by HMRC, especially if you are using a third party service like Koinly. Think HMRC will be spending all there effort going after people they know own crypto and have sold some and haven’t declared anything on their tax return.

Any crypto exchange that legally wants to operate within the UK such as Coinbase and Gemini regularly hands over the details of all their UK users to HMRC! I’ve had several emails from coinbase over the years telling me my details have been handed over!

[Danvet]

I agree with this, at the end of the day any of us who have been proactive trying to the best of our abilities to calculate our losses/gains are doing our upmost to be HMRC compliant.

It’s all the others who try to hide it that are the problem. Just crazy when you think of how many kids/teens are involved in crypto and won’t have a clue on any of the tax implications.