Why valuation matters
Every disposal and every income event needs a GBP value at the point of the transaction. That sounds straightforward, but crypto markets run 24/7, prices vary between exchanges, and many tokens don't have a direct sterling pair at all.
Get the valuation wrong — or fail to document how you arrived at it — and you're exposed to HMRC enquiries, penalties for inaccurate returns, and the growing risk of automated cross-checks against exchange-reported data.
HMRC's valuation framework
HMRC's guidance in CRYPTO23000 is deliberately principles-based rather than prescriptive. There is no mandated pricing source, no required method, and no specified aggregator. The entire framework rests on three things:
- Take reasonable care to arrive at an appropriate valuation
- Apply a consistent methodology across your transactions
- Keep records of how you did it
The legal backstop is TCGA 1992 s.272, which defines market value as the price assets might reasonably fetch on a sale in the open market.
Defensible pricing methods
Spot price from the exchange
The most defensible approach is the spot price from the exchange where the transaction took place. This is the closest match to the s.272 "open market" test because it reflects what the asset was actually trading at when the disposal happened.
Daily average or daily closing price
A daily average or daily closing price is also perfectly reasonable, particularly where exact timestamps are unreliable or unavailable. It smooths out intraday volatility and is easy to source consistently.
Volume-weighted average price (VWAP)
VWAP is another robust option, widely used in institutional contexts because it accounts for trading volume and reduces the impact of outlier prices.
What to avoid
Consistently picking the daily low as disposal proceeds or the daily high as acquisition cost will raise eyebrows. It's not explicitly prohibited, but if your chosen method systematically produces the most favourable tax outcome, that's hard to justify as "reasonable care" and exactly the kind of pattern that invites an enquiry.
In practice, if you use a valuation or estimate on the Capital Gains pages of your Self Assessment, you should tick the relevant box and provide a white space note explaining the methodology and valuation sources used.
Valuing DeFi and DEX transactions
Where a direct GBP price isn't available — DeFi transactions, DEX trades, or tokens that only pair against ETH or USDT — you'll need to establish value through an intermediate pair and convert to GBP at the prevailing rate.
Remember that crypto-to-crypto swaps are disposals, so each one creates its own valuation event.
Reputable aggregators like CoinGecko or CoinMarketCap work well as fallback sources. What matters most isn't which source you pick — it's that you use it consistently.
Worked example: Sarah swaps ETH for a DeFi token
Sarah uses Uniswap to swap 0.5 ETH for 10,000 XYZ tokens. XYZ only trades against ETH, with no direct GBP pair available.
At the time of the swap, ETH is priced at £2,400 on CoinGecko. The 0.5 ETH she spent is therefore worth £1,200, giving each XYZ token an acquisition cost of £0.12.
Her audit log records:
- The pricing source (CoinGecko)
- The ETH/GBP rate and timestamp
- The conversion path (XYZ → ETH → GBP)
- The fact that no direct GBP or USD price was available for XYZ
Six months later, XYZ is listed on a centralised exchange with a GBP pair. She sells 5,000 XYZ at £0.30 each.
| | Amount |
|---|---|
| Proceeds | 5,000 × £0.30 = £1,500 |
| Cost basis | 5,000 × £0.12 = £600 |
| Capital gain | £900 |
Because she documented her methodology at the point of acquisition, she has a defensible valuation if HMRC queries the cost basis.
Illiquid and newly launched tokens
This is where it gets harder. HMRC offers no specific guidance, so you're working with the best available evidence:
- The price from the liquidity pool
- The value of the counterparty asset in the trade
- A reasonable estimate based on comparable tokens
If a token genuinely has no market value, its value at receipt can be nil.
For tokens that become worthless, a negligible value claim crystallises the loss — allowing you to claim it against other gains without actually disposing of the token.
These edge cases are exactly where documentation matters most. Record why the standard approach didn't apply and how you arrived at the figure.
CARF reporting: why this matters more than ever
The compliance stakes are rising. The Reporting Cryptoasset Service Providers Regulations 2025 require UK exchanges to report transaction-level data to HMRC from January 2026, with the first reports due by May 2027.
From that point, HMRC will have exchange data to benchmark against Self Assessment returns. If your valuations don't hold up against what the exchanges reported, expect questions.
This makes consistent, documented valuation methodology more important than ever. The days of approximate figures and rough estimates are numbered.
Building your audit trail
Think of what you need as an audit log for every valuation decision:
- Pricing source — which exchange or aggregator you used
- Timestamp — the date and time of the transaction
- Conversion path — how you got from the token to GBP (direct pair, or via an intermediate like ETH or USD)
- Rationale for departures — if you couldn't use the standard method, explain why and what you used instead
That log turns "I used a consistent methodology" from an assertion into evidence.
Crypto tax calculators like Recap handle this automatically, providing consistent GBP valuations across thousands of transactions with a full audit trail showing how each one was priced and why. When HMRC comes calling with CARF data in hand, that's the documentation that makes the difference.
Key takeaways
- HMRC doesn't mandate a specific pricing source — but you must take reasonable care and be consistent
- Spot price from the trading exchange is the most defensible method, followed by daily average and VWAP
- Avoid systematically favourable pricing — cherry-picking daily highs and lows invites scrutiny
- DeFi and DEX trades need intermediate pair conversions with documented conversion paths
- Illiquid tokens require best-available-evidence valuations with clear rationale
- CARF reporting from 2026 means HMRC will cross-check your returns against exchange data
- Document everything — your audit trail is your defence