Cryptoassets make up a growing portion of the market, and businesses are increasingly looking to take advantage of these digital currencies.
If your business carries out activities involving the exchange of cryptoassets, then you are liable to pay tax on them.
However, understanding how HM Revenue & Customs (HMRC) treats cryptoassets for tax purposes can be tricky.
Here is what you need to know about how HMRC taxes cryptoassets for corporate organisations.
Disposal of cryptoassets
Disposal of cryptoassets includes selling tokens for money and exchanging tokens for a different type of token.
Using cryptoassets to pay for goods or services, or giving away cryptoassets to another person, also counts as a disposal.
When your business regularly buys or disposes of cryptoassets, this could be classed as a trade, meaning that the profits or losses will form part of the company’s trading profits. Whether this applies will depend on a range of factors including, frequency of transactions, level of organisation and intention.
If this does not apply, and the income is not taxable in any other way, the disposal will be treated as a capital gain upon which corporation tax will be payable.
In February 2025, HMRC updated its Cryptoassets Manual in relation to VAT. This confirms that VAT is applicable to goods or services sold in exchange for cryptoasset exchange tokens. The taxable amount being calculated is based on the sterling value at the time of the transaction.
It should also be noted that HMRC does not consider the trading of cryptoassets to be gambling. They also do not consider cryptoassets to be money or currency.
Airdrops and mining
If your business receives an allocation of cryptoassets as part of an ‘airdrop’, any future disposal will be treated as a capital disposal.
[NB: In the world of cryptocurrency, an airdrop is a marketing campaign which involves the free distribution of tokens or coins to gain awareness, generate a buzz, attract new users, and reward loyalty.]
Where mining activity is deemed to be a trading activity by HMRC, then any income will be regarded as trading income. Otherwise, it will be treated as miscellaneous income. If the miner keeps the awarded assets, they may have to pay corporation tax on the chargeable gain when they sell them.
[NB: Crypto mining is how some cryptocurrencies, such as Bitcoin, process transactions and mint new tokens. Mining for cryptocurrency is like digitally mining for gold].
It is important to note that how the income/profit from cryptoassets is treated for corporation tax purposes has an effect on the costs that can be deducted in arriving at the taxable amount.
Taxes on cryptoassets – do not get caught out
Taxing cryptoassets is a complex process, but while it may be tempting to bury your head in the sand, failure to declare gains or income from cryptoassets could get you into trouble with HMRC. Misunderstanding how the income or profit is taxed could also lead to costly errors.
If your business is involved in cryptoassets, it would be wise to seek expert tax advice from a specialist.
