Tax-Loss
Harvesting.

HMRC anticipated exactly this strategy and introduced the 30-day anti-avoidance rule, sometimes called the “bed and breakfasting” rule.

Here's the catch. If you sell a token and repurchase the same token within 30 days, HMRC matches the sale against the repurchase rather than your original pool. The result is that the loss you thought you crystalised simply disappears. It's as if the sale never happened for tax purposes.

Example: you sell 5 ETH at a £2,000 loss on 1 March. You buy 5 ETH again on 15 March. HMRC matches the 15 March purchase against the 1 March sale. Your loss is cancelled. You waited two weeks for nothing.

The rule applies to the same token only. Selling ETH and immediately buying BTC is fine — you're not repurchasing the same asset. But that introduces market risk while you're out of the position.

The same-day rule is the more aggressive version. If you buy and sell the same token on the same calendar day, those transactions are matched against each other first — before either the 30-day rule or your section 104 pool applies.

This affects more people than they realise. If you're using a dollar-cost averaging strategy and buying small amounts daily, selling on the same day you bought will always match against that day's purchase. Plan your sells around your buy schedule.

Step 1: Calculate your current gains.Before 5 April, total up every disposal you've made in the tax year. Work out your net position across all capital assets — crypto, shares, property.

Step 2: Find your unrealised losses. Review your portfolio for tokens currently worth less than your cost basis. These are candidates for harvesting.

Step 3: Decide how much to harvest.You want to bring your net gain as close to £3,000 as possible without going below zero. Losses below zero just carry forward rather than being used now — unless you have other gains to offset.

Step 4: Sell before 5 April.The disposal must happen within the tax year. Selling on 6 April moves it into next year's calculation.

Step 5: Wait 30 days before repurchasing.If you want to get back into the position, mark 30 days in your calendar. Not 29. Not “around 30.” Thirty clear days.

Step 6: Report the loss to HMRC. Even if you have no overall gain to declare, register the loss through Self Assessment or the HMRC real-time Capital Gains service. You have four years from the end of the tax year in which the loss arose.

Alice is a higher-rate taxpayer. In 2025/26 she sells Bitcoin for a £15,000 gain. She also holds Cardano, purchased for £5,000, now worth £2,500 — a £2,500 unrealised loss.

Without harvesting, her tax calculation runs like this. Net gain: £15,000. Less annual exempt: £3,000. Taxable gain: £12,000. At 24%: £2,880 tax.

She sells the Cardano on 28 March and waits 30 days before considering a repurchase. Now: net gain £15,000 minus £2,500 loss equals £12,500. Less £3,000 exempt. Taxable gain: £9,500. At 24%: £2,280 tax. She saves £600 with one trade.

If Alice's unrealised losses across her portfolio totalled £12,000 instead, she could potentially wipe out her taxable gain entirely. The £3,000 annual exempt amount would cover the remaining £3,000 gain. Tax owed: nil.

If your losses exceed your gains in a given year, the surplus does not disappear. It carries forward to future tax years indefinitely, and can offset future gains whenever they arise.

Worth knowing: losses must be reported to HMRC within four years of the end of the tax year in which they occurred. A loss from 2022/23 must be claimed by 5 April 2027. After that, HMRC will not accept it.

In practice, this means that even in bear markets where you have no gains to offset, it is worth keeping records of every disposal and registering the losses. You are building a future tax asset.

The strategy works best when you have meaningful taxable gains to offset, you genuinely no longer want the losing asset (or are happy to wait 30 days), and you can afford the transaction costs of selling and rebuying.

It makes less sense for small gains close to the £3,000 exempt amount, where the tax saving is minimal and the costs of trading outweigh the benefit.

It also makes less sense near the end of the tax year if you cannot practically execute the sale before 5 April. An incomplete harvest is either wasted or moves into the next tax year.