Can I Put Cryptocurrency in a Limited Company

Can a limited company own cryptocurrency

Yes, a limited company can legally buy, hold, and sell cryptocurrency in the UK. Digital assets are treated as property, not currency, so a company can include them on its balance sheet like any other investment or asset.

A company can acquire cryptocurrency in several ways:

• Buying it directly through an exchange

• Accepting it as payment for goods or services

• Receiving it as part of an investment or partnership arrangement

The key requirement is that any crypto activity must be recorded accurately in the company’s accounts and comply with HMRC’s tax reporting rules.

How cryptocurrency is classified for companies

HMRC does not recognise cryptocurrency as money or foreign currency. Instead, it treats it as an intangible asset or investment depending on how the company uses it.

• If the company trades in cryptocurrency (buying and selling frequently for profit), the gains are treated as trading income and taxed through Corporation Tax.

• If the company invests in cryptocurrency (holding it for long-term appreciation), the gains are treated as chargeable gains similar to other capital assets.

The distinction between trading and investing depends on the company’s level of activity, intent, and scale of operations.

How cryptocurrency is taxed in a limited company

All profits made from cryptocurrency are subject to Corporation Tax rather than personal Capital Gains Tax.

The Corporation Tax rate for the 2025–26 financial year is 25% for companies with profits over £250,000, and a tapered rate applies for smaller profits.

If the company trades crypto as part of its main business activity, the profits and losses are treated as ordinary business income and expenses.

If the company holds crypto as an investment, any profit realised on disposal (for example, when selling or exchanging crypto) is treated as a chargeable gain.

In both cases, accurate valuation and record keeping are essential, as crypto prices fluctuate frequently and transactions must be recorded in pounds sterling.

Example

If a company buys £20,000 worth of Bitcoin and later sells it for £35,000, the £15,000 profit is taxable as either trading income or a chargeable gain depending on how the business operates.

Transaction fees and other related costs can be deducted where they are wholly and exclusively for the purpose of trade.

Accepting crypto payments through your company

A company can accept cryptocurrency as payment for goods or services, but there are accounting and tax implications.

HMRC requires that the crypto received be valued at its market value in pounds sterling at the time of the transaction. This value is recorded as business income and subject to Corporation Tax in the same way as if the payment were made in cash.

If the company later disposes of that cryptocurrency, any increase or decrease in value from the time of receipt will create a gain or loss that must also be reported.

Example

A business sells a product for £1,000 and receives cryptocurrency worth £1,000 at the time. Six months later, the crypto is sold for £1,500.

• £1,000 counts as trading income for the sale.

• £500 counts as a gain on disposal and is also subject to Corporation Tax.

Holding cryptocurrency as a company asset

If the company buys and holds cryptocurrency as a long-term asset, it appears on the balance sheet under intangible assets or investments, depending on its purpose.

It must be valued at the cost of acquisition and reviewed at each accounting year end. If the market value falls below the purchase price, an impairment may need to be recorded.

Auditors and accountants may request documentation proving the company’s ownership and valuation method, including:

• Exchange statements or transaction receipts

• Wallet addresses owned by the company

• Valuation evidence at each reporting date

Paying for business expenses with crypto

If a company uses cryptocurrency to pay for goods or services, the payment is treated as a disposal for tax purposes.

HMRC views this as equivalent to selling crypto for its market value and immediately using the proceeds for the purchase.

For example, if a company uses Ethereum worth £5,000 to pay a supplier, and the crypto was originally bought for £3,000, the £2,000 gain is taxable under Corporation Tax.

This rule applies even if the crypto never converts into fiat currency.

Taking cryptocurrency out of the company

If the company pays a director, shareholder, or employee in cryptocurrency, it must treat the transaction like any other form of remuneration.

• Payments to directors or employees count as employment income, subject to Income Tax and National Insurance via PAYE.

• Payments to shareholders may count as dividends, which must be declared and taxed accordingly.

The company will also have to recognise a gain or loss on disposal of the crypto when transferring it.

VAT and cryptocurrency

HMRC does not currently charge VAT on the buying or selling of cryptocurrencies themselves. However, normal VAT rules apply when goods or services are supplied in exchange for crypto.

The sterling value of the goods or services at the time of the transaction determines the VAT calculation, not the later value of the crypto asset.

Accounting challenges and record keeping

Crypto accounting is more complex than for traditional assets due to price volatility and the volume of transactions.

Companies must keep detailed records including:

• Dates of purchase and sale

• Transaction values in pounds sterling

• Wallet addresses and exchange accounts

• Fees paid and counterparties involved

These records must be retained for at least six years in case of HMRC inspection.

Companies are also advised to use specialist crypto accounting software or work with accountants familiar with blockchain transactions to ensure compliance.

Advantages of holding crypto in a limited company

• Profits are taxed under Corporation Tax rates, which may be lower than personal rates for high earners.

• Losses can be offset against other company profits.

• Crypto profits remain in the company for reinvestment.

• Adds flexibility for businesses operating in the digital economy.

Potential drawbacks

• Complex accounting and compliance requirements.

• Corporation Tax applies on all realised gains, even if profits are reinvested.

• Difficulty obtaining banking and insurance services for crypto-active businesses.

• Increased scrutiny from HMRC and auditors.

Final thoughts

You can legally hold cryptocurrency in a limited company, and many UK businesses now do so for investment or operational purposes. However, doing so introduces additional tax, accounting, and compliance responsibilities.

Whether crypto is treated as a trading asset or an investment depends on the nature of your company’s activity. In both cases, profits are subject to Corporation Tax, and accurate record keeping is essential.

Before transferring personal crypto into a company or using digital assets in your business, seek professional advice from an accountant who understands crypto taxation. With the right structure and compliance in place, holding cryptocurrency in a limited company can be both practical and tax-efficient.