Crypto on PayPal UK - Identification rules and exceptions to pooling

The information provided by PayPal is not intended to be and should not be construed as tax advice. You should consult your tax adviser regarding which cost-basis method is appropriate for your specific situation.

For individuals, HM Revenue and Customs (HMRC) has laid out specific cost-basis rules. The rules define how to calculate the average cost of assets for tax reporting purposes, also called “pooling”.

PayPal provides its users with supplemental materials, including a year-end gain/loss statement detailing all taxable dispositions for the year. These documents detail the transaction-level activity you can use to complete your tax reporting, which includes the date acquired, the date disposed, the cost basis (included for user convenience), the proceeds, and the resulting gain or loss.

If you have crypto assets outside of PayPal’s platform and subsequently disposed of the assets, PayPal will not have visibility into your information, and it is, therefore, your responsibility to track and report such information.

For additional information, please refer to the HMRC guidance on Crypto assets – Tax on crypto assets and/or consult your tax adviser.