Deposits & Withdrawals: Understanding Deposits vs Acquisitions → Understanding Withdrawals vs Disposals
Disclaimer: This article is intended as an informative piece. This is not accounting or tax advice. Please speak to a qualified tax professional about your specific circumstances before acting upon any of the information in this article.
In Recap, not every outgoing crypto transaction is treated the same. Understanding the difference between a Withdrawal and a Disposal is key to ensuring your S104 pool is correct and your capital gains figures are accurate.
What is a Withdrawal?
A Withdrawal is a movement of crypto out of one of your Recap-tracked accounts. On its own, a Withdrawal does not remove anything from your Section 104 (S104) pool and does not trigger a capital gain or loss.
This is the correct classification when crypto is moving between accounts you already own. For example, if you transfer ETH from Coinbase to your Ledger wallet and both are connected to Recap, the Withdrawal from Coinbase and the Deposit into the Ledger represent an internal movement. Your ownership has not changed, so Recap does not record a disposal and the S104 pool remains unchanged.
One exception to be aware of: any network fees attached to a Withdrawal are treated as Disposals by Recap. Because fees are paid out of your holdings and leave your ownership permanently, Recap records them as a disposal and includes them in your capital gains calculation.
What is a Disposal?
A Disposal is any event where crypto leaves your ownership permanently. Disposals remove assets from your S104 pool and trigger a capital gains calculation, comparing the disposal proceeds to the original acquisition cost.
Common examples may include:
Selling crypto for fiat (recorded as a Trade (Sell) in Recap)
Spending crypto to purchase goods or services
Gifting crypto to another person
Trading one crypto for another
Paying a network or trading fee in crypto
Why the distinction matters
When a transaction that is really a Disposal is recorded as a Withdrawal, no capital gain or loss is calculated. The asset stays in your S104 pool as though you still own it, and your tax report will not reflect the actual disposal.
This means your reported gains for the tax year may be understated. Equally, if the disposal resulted in a loss, that loss goes unclaimed. Getting the transaction type right ensures your tax report reflects your actual activity.
Example
Imagine you sell 1 BTC for £40,000 on an exchange. The transaction is imported into Recap as a Withdrawal.
Because it is classified as a Withdrawal, no disposal is recorded:
Pool Balance: 1 BTC (the BTC remains in the S104 pool as though it was never sold)
Portfolio Balance: 0 BTC (the BTC is no longer visible in your connected accounts)
Balance Difference: -1 BTC (Recap flags this as a discrepancy)
No capital gain is reported on your Tax screen, even though a taxable disposal has taken place.
The correct classification here is Trade (Sell). Reclassifying the Withdrawal as a Trade (Sell) removes the 1 BTC from the S104 pool and calculates the capital gain based on your original acquisition cost.
To understand more about how pool and portfolio balances work, and what to do when they don't match, see:
Understanding Pool and Portfolio Balances
Resolving Pool vs Portfolio Balance Differences
What to do if a Withdrawal should be a Disposal
If you have a Withdrawal that should have been recorded as a Disposal, or a related type such as Trade (Sell), you can reclassify it directly in Recap.
See our guide on How to Reclassify a Transaction for step-by-step instructions.
If you are unsure whether a transaction is an internal transfer or a Disposal, consider where the crypto went. If it moved to an account you already own and that account is connected to Recap, the Withdrawal classification is likely correct. If the crypto left your ownership entirely — through a sale, a trade, a gift, or a purchase — it is a Disposal and should be classified accordingly.