Knowledge

Buying Crypto Like Bitcoin Through Your UK Limited Company

Everyone and their Gran seems to be buying Crypto these days… and you can see why, with huge gains in very little time, people are being seduced by the action and volatility!

Now, you know the score by now… I can’t give you any advice whatsoever when it comes to what to buy, what not to buy or even if you should get involved at all. 

 

What I can say is Crypto is super high risk, make sure you know what you are getting into before you get involved.

 

With that out the way, let’s talk about stuff I CAN advise on… tax tax tax.

 

In a recent article, I talked about the tax implications of selling Crypto for a profit from a personal perspective, but this time let’s look at if you buy Crypto in a company wrapper.

 

Can you buy Crypto through a limited company?

 

The short answer is yes… you might not want to, but we can come to that later. But yes you can buy Bitcoin etc through your company.

 

To do that you’re going to need to find a broker or platform that allows business accounts from limited companies. This is important, just like any other bank account this needs to be in your company name and as such is regarded as an asset and account belonging to your company.

 

Once you’ve found the right platform, done all the paperwork and have been verified you are ready to go.

 

Transfer funds in sterling from your business bank account into your brokerage account and you are ready to trade!

 

How is Crypto taxed inside a limited company wrapper?

When you buy Cryptocurrency like Bitcoin or Etherium through your limited company the rules change slightly from personal.

 

HMRC state (in a roundabout way with some exceptions)…. That any time you dispose of an asset including a digital asset any gain is usually subject to corporation tax.

 

So let’s look at an example:

 

You buy £10k worth of RJFcoin, it rallies to £20k over six months and you sell, making a ten grand profit.

 

What corporation tax will you pay?

 

Currently, corp tax sits at 19% so on a 10k gain you’d need to pay £1,900 tax.

 

Remember if that was your personal account, you’d have £12,300 of capital gains allowance to use, so you’d potentially have zero tax to pay.

 

Don’t forget though even if you do make a gain in your business, you still need to pay some income/dividend tax depending on how things are structured to get that money into your personal account. (How else will you buy the obligatory Crypto traders Lambo?!)

Can I flip my gains into another coin or just transfer the coins to my personal account?

 

Good thinking, but HMRC have this covered.

 

Even if you transfer your coins to another coin, HMRC considers that disposal, so you still need to pay tax on the gains.

 

As for transferring your Crypto to your personal account, if you did that it would likely be treated as a directors loan with all the hassle and challenges that come with that. Things can get very expensive if you have an unpaid directors loan on the book…

 

Summary

 

Yes, it is possible and simple enough to buy Crypto through your limited company. As we’ve seen there are tax implications to consider though. 

 

If you’re thinking of trading Crypto and don’t know whether to buy and sell through your company or personal account give us a call and let us work out your best options based on your circumstances.

 

We’ll look at things like:

 

  • The amount you are looking to buy
  • Personal Tax rate
  • Any allowances used up already
  • Other income

Etc

 

Then we’ll come up with a plan. No charge and you don’t need to be a client (but we hope you will be!)