Can I Pay Corporation Tax in Crypto

As cryptocurrency becomes more mainstream, some UK businesses are starting to accept or hold digital assets as part of their operations. This raises an important question for company owners: can you pay your Corporation Tax bill using cryptocurrency? While HMRC recognises crypto as an asset for tax purposes, it does not yet accept digital currencies as a method of payment. This article explains how Corporation Tax applies to crypto transactions, how HMRC treats these assets, and what businesses should do when accounting for them.

HMRC’s Position on Cryptocurrency Payments

HMRC does not currently allow any UK taxes, including Corporation Tax, to be paid in cryptocurrency. All payments must be made in pounds sterling through one of HMRC’s approved methods, such as bank transfer, Direct Debit, debit card, or online banking.

This applies even if your company earns income or holds assets in crypto. When calculating and paying Corporation Tax, all figures must be converted into pounds at the relevant exchange rate.

In short, while your business can trade or be paid in digital currencies, you must still settle any tax liabilities in traditional currency.

How HMRC Classifies Cryptocurrency for Businesses

HMRC does not treat cryptocurrency as money or legal tender. Instead, it views it as a digital asset.

For tax purposes, how crypto is treated depends on how your company uses it:

  • If your company buys and sells crypto as an investment, it may be subject to Capital Gains Tax within your Corporation Tax calculation.

  • If your business receives crypto as payment for goods or services, it counts as trading income and is taxable at the point of receipt.

  • If you mine or stake crypto, any tokens earned are treated as taxable income based on their market value at the time they are received.

When the crypto is later sold or exchanged, any gain or loss is also included in your taxable profits.

Accounting for Crypto in Your Business Records

Even though you cannot pay tax in crypto, you can still hold and use it as part of your business operations. However, you must maintain clear accounting records.

Your accountant will typically:

  • Record all crypto transactions in pounds sterling using the market value at the date of each transaction.

  • Track gains and losses for each disposal or exchange.

  • Include profits from crypto trading or investment in your Corporation Tax return.

  • Apply appropriate accounting standards such as UK GAAP or IFRS for digital assets.

Accurate record keeping is essential because crypto values fluctuate significantly. HMRC expects detailed transaction histories, including exchange rates, wallet addresses, and transaction IDs, to verify figures in your tax return.

Paying Corporation Tax on Crypto Profits

Corporation Tax is due on your company’s total taxable profits, which include any profits from cryptocurrency transactions.

For example, if your business buys Bitcoin and later sells it at a higher value, the gain will be included in your Corporation Tax computation. Similarly, if your company accepts crypto payments for services, those payments are converted into sterling and taxed as income.

Example:
A company receives £10,000 worth of Ethereum for web development work. At the time of payment, the Ethereum is worth £1,500 per token. The business must record the transaction as £10,000 income. If the Ethereum is later sold for £12,000, the £2,000 profit is also taxable.

HMRC’s approach ensures that tax is paid on both the income and any future capital gains arising from crypto activity.

Converting Crypto to Pay Corporation Tax

Since HMRC requires all tax payments in sterling, companies that hold crypto must convert part of their holdings into cash before paying their tax bill.

To do this efficiently:

  1. Keep track of your estimated Corporation Tax liability throughout the year.

  2. Convert sufficient crypto to pounds in advance of the payment deadline.

  3. Use an exchange with transparent fees and records to evidence the transaction.

  4. Retain proof of the conversion rate used for accounting purposes.

Leaving conversions until the last minute can expose you to price volatility, which may result in shortfalls or additional costs.

Can HMRC Accept Crypto in the Future

As of 2025, HMRC has not announced any plans to accept cryptocurrency as a payment method for Corporation Tax or other taxes.

However, some governments are exploring digital payment options, and the UK is studying the potential introduction of a digital pound (a form of central bank digital currency). This would differ from private cryptocurrencies but could pave the way for more flexible digital tax payments in the future.

Until then, businesses must continue using sterling for all tax payments, regardless of how much of their income or assets are held in crypto.

Risks of Using Crypto for Business Transactions

Holding or trading crypto within a company comes with added risks that affect both tax compliance and cash flow:

  • Volatility: The value of crypto can fluctuate rapidly, affecting the accuracy of tax calculations.

  • Record keeping: HMRC requires precise data for each transaction, including valuations at the exact time of trade.

  • Regulation: Businesses dealing in crypto may need to register with the Financial Conduct Authority (FCA) for anti-money laundering compliance.

  • Audit implications: Poor records or unclear valuations can lead to challenges during HMRC audits.

Working with an accountant who understands digital assets ensures transactions are recorded correctly and that the company remains compliant with both tax and financial reporting standards.

How an Accountant Can Help

An accountant experienced in cryptocurrency taxation can assist your business by:

  • Determining the correct tax treatment for crypto assets.

  • Converting crypto values into pounds using recognised exchange rates.

  • Including crypto-related profits and losses in your Corporation Tax return.

  • Advising on cash flow planning to meet tax payment deadlines.

  • Ensuring compliance with HMRC’s disclosure and record-keeping requirements.

They can also help you design systems for tracking crypto transactions and prepare for any future changes in how HMRC handles digital currencies.

Summary

At present, you cannot pay Corporation Tax in cryptocurrency. HMRC requires all tax payments in pounds sterling, even if your business earns or holds crypto assets.

However, companies that trade, invest in, or receive crypto must still include those transactions in their taxable profits. Accurate record keeping, regular conversions to sterling, and professional advice are essential for compliance.

As regulation and technology evolve, future tax systems may become more flexible, but for now, crypto remains a taxable asset, not a recognised form of payment for UK Corporation Tax.