UK prediction-market taxes: Section 104 pooling for Polymarket

For most UK traders, Polymarket positions are chargeable assets: disposing of them — selling, merging, or redeeming at resolution — is a capital gains event. HMRC pools identical shares into a Section 104 holding, which means your basis is the average cost of that token, not the price of whichever lot you happen to sell.

Every acquisition of the same outcome token adds its cost to the pool and increases the number of pooled shares. Every disposal subtracts proportionally: dispose 150 of 200 pooled shares bought for a combined $100, and your allowable basis is $75 (three-quarters of the pool). The single-average figure is why the UK doesn't care which “lot” you meant to sell.

Bitfork Tax applies this pooling automatically when the UK pack is selected — the engine switches from FIFO to average cost, matching HMRC's method.

Capital gains above the annual exempt amount (the allowance, £3,000 in recent years) are subject to Capital Gains Tax. Gains below it are tax-free, though they still use up the allowance and must be reported if you're in Self Assessment.

Bitfork Tax's UK pack lets you enter your allowance (in USD, session-only) and shows how much of your gain sits above it. Check the current figure on gov.uk — it has changed repeatedly.

UK gambling winnings are generally tax-free, and there is debate about whether prediction-market positions count as bets. HMRC has not given a blanket ruling for Polymarket-style platforms; treating positions as chargeable assets is the conservative default most advisors recommend. This is exactly the kind of question to put to a professional — Bitfork Tax gives you the numbers, not the verdict.