Cost basis: the number that decides your bill
Same trades, two different results — because cost basis is a method, not a fact. Here's what it is and why it's the easiest thing to get wrong.
- What cost basis is, in one sentence
- Why the matching method changes the total
- The record you need to keep from day one
HMRC doesn't let you pick which coins you sold — same-day and 30-day matching rules apply first, then everything else is averaged into a single Section 104 pool per token.
Relevant filing: Self Assessment.
One sentence
Cost basis is what an asset cost you, expressed in GBP, at the moment you got it — including what you paid in fees.
Sounds trivial. It isn't. If you bought the same token twelve times at twelve different prices and then sold a slice of it, which of those purchases did you just sell? That question has no natural answer, so tax systems impose one.
The method is the whole game
Different countries force different matching methods — pooling everything into one average, taking the oldest coins first, or tracking each wallet separately. Pick the wrong one and your gain can swing wildly, in either direction, from identical trades.
This is the single most common source of a wrong number, and it's silent: nothing on your exchange screen tells you your method is off.
The price on the day, not the price today
Cost basis needs the value at the time of each operation, not the current one. That means hunting historical prices for every date you traded — the part that turns a Sunday into a lost weekend when you do it by hand.
This is exactly the mechanical work worth automating: the engine pulls the historical price for each operation's date and shows the calculation, so you can check it line by line instead of trusting it.
