UK crypto accounting for a small or medium-sized company comes down to two sets of rules that do not always line up. FRS 102 decides how tokens sit in the accounts (usually as intangible assets at cost, amortised and tested for impairment), while HMRC's Cryptoassets Manual decides how gains are taxed (usually as chargeable gains on a pooled cost, or as trading profits for a genuine dealer).
Since 1 January 2026 a third layer applies. UK exchanges and other cryptoasset service providers now collect customer and transaction data under the Cryptoasset Reporting Framework (CARF) and send it to HMRC, which uses the data to link cryptoasset activity to tax records. A company's UK crypto accounting records therefore need to agree with what its platforms report. Tax rates and some reporting details below are stated as of October 2026, ahead of the Budget on 28 October 2026, and should be rechecked once Budget measures are published.
This guide is for UK companies and the US groups that own them. If your reporting is under US GAAP, our guide to cryptocurrency accounting under ASU 2023-08 covers fair value measurement and the US tax forms instead.
The Cryptoassets Manual (CRYPTO10100) states that "HMRC does not consider cryptoassets to be currency or money," and adds that the tax treatment "is dependent on the nature and use of the token and not the definition of the token." Its business guidance (from CRYPTO40000) deals mainly with exchange tokens such as bitcoin.
Every acquisition, disposal and swap needs a pound sterling value at the time of the transaction, set using "a consistent methodology" that the company records (CRYPTO40100). Because tokens are not money, the foreign exchange rules in section 328 of the Corporation Tax Act 2009 do not apply to them (CRYPTO41050).
A company holding tokens falls into one of three Corporation Tax routes. The order matters, because the intangible fixed assets rules take priority over the chargeable gains rules.
1. Trading profits. If buying and selling tokens amounts to a trade, profits and losses are part of trading income. HMRC sets a high bar here: "Only in exceptional circumstances would HMRC expect businesses to buy and sell exchange tokens with such frequency, level of organisation and sophistication that the activity amounts to a financial trade in itself" (CRYPTO40150).
2. The intangible fixed assets regime (CTA 2009 Part 8). The HMRC guidance on intangible fixed assets says companies that account for exchange tokens as intangible assets may be taxed under these rules only if the token is both an intangible asset for accounting purposes and an "intangible fixed asset", meaning it "has been created or acquired by a company for use on a continuing basis." The same page adds an important limit: "Exchange tokens which are simply held by the company, even when held in the course of its activities, will not meet this definition." In practice, an SME that buys bitcoin as a treasury or investment holding is unlikely to fall into Part 8, even though its accounts show the tokens as intangible assets.
3. Chargeable gains. Where the activity is not a trade and Part 8 does not apply, a company holding tokens "as an investment" pays Corporation Tax on its gains when it disposes of them (CRYPTO41200). This is the most common outcome for SMEs.
As of October 2026, gains and profits are taxed at the company's Corporation Tax rate: 25% main rate for profits over £250,000, 19% small profits rate at £50,000 or less, with marginal relief in between. Check these after the 28 October 2026 Budget.
Tokens of the same type are interchangeable, so HMRC applies pooling under section 104 of the Taxation of Chargeable Gains Act 1992 instead of tracking individual coins. Each token type needs its own pool. A company holding bitcoin and ether keeps two pools, each with its own "pooled allowable cost".
The HMRC guidance on Corporation Tax pooling notes that "there are slight differences between the pooling rules as they apply for Capital Gains Tax and Corporation Tax purposes." The difference sits in the matching rules that run before the pool. The HMRC guidance on pooling for individuals uses a 30-day window, while companies use a shorter 10-day window.
| Matching step | Company (Corporation Tax) | Individual (Capital Gains Tax) |
|---|---|---|
| First | Same-day acquisitions of the same token | Same-day acquisitions of the same token |
| Second | Acquisitions in the 9 days before the disposal, first in first out | Acquisitions in the 30 days after the disposal |
| Third | Section 104 pool at average cost | Section 104 pool at average cost |
| Rate as of October 2026 | Company's Corporation Tax rate (19% to 25%) | 18% or 24%, after the £3,000 annual exempt amount for 2026 to 2027 |
Non-fungible tokens are outside pooling altogether, because they are separately identifiable. US readers used to choosing specific lots should note that UK pooling leaves no choice of identification method, which is a different approach from the one described in our article on crypto cost basis.
Allowable costs follow section 38 TCGA 1992. HMRC accepts the sterling purchase price, fees for recording a transaction on the ledger, and the costs of valuing or apportioning tokens to compute a gain (CRYPTO41300).
FRS 102 has no section written for cryptoassets, so preparers apply the general sections. The FRS 102 standard published by the FRC (September 2024 edition) defines an intangible asset as "an identifiable non-monetary asset without physical substance," and most exchange tokens held by an SME meet that definition. The exception is an entity that holds tokens for sale in the ordinary course of business. Paragraph 18.1 sends those holdings to Section 13 Inventories.
The Periodic Review 2024 amendments apply to accounting periods beginning on or after 1 January 2026, so December 2026 year ends are the first to apply them in full. None of those amendments added crypto-specific rules.
Under paragraph 18.18A, the cost model carries an intangible asset "at cost less any accumulated amortisation and any accumulated impairment losses." Paragraph 18.19 states that "all intangible assets shall be considered to have a finite useful life," so FRS 102 does not allow an indefinite-life approach for tokens.
Paragraph 18.23 softens the effect. Residual value is assumed to be zero unless "there is an active market for the asset" and residual value can be set by reference to that market, with that market probably still existing at the end of the useful life. The amortisable amount is cost less residual value, so for a widely traded token with a market-based residual value at or above cost, the annual amortisation charge can be nil. Record the useful life, residual value basis and price source in the accounting policy.
Paragraph 18.18B allows the revaluation model only where fair value "can be determined by reference to an active market," defined in the glossary as a market with transactions of "sufficient frequency and volume to provide pricing information on an ongoing basis." The policy must apply to the whole class. Increases go to other comprehensive income and a revaluation reserve (18.18G). Decreases go first against that reserve and then to profit or loss (18.18H).
Paragraph 18.25 applies Section 27. Where recoverable amount falls below carrying amount, the difference is an impairment loss recognised "immediately in profit or loss" (27.5 and 27.6). For tokens, a market price below carrying amount or loss of access to private keys are typical reasons to test at the reporting date.
Tokens held for resale go to Section 13 at "the lower of cost and estimated selling price less costs to complete and sell" (13.4). Paragraph 13.3 allows fair value less costs to sell through profit or loss only where the entity "operates in an active market where sale can be achieved at published prices, and inventory is a store of readily realisable value."
A UK company with a 31 December 2026 year end holds Token A as an investment. It uses the FRS 102 cost model and, for tax, the chargeable gains rules. Figures are in pounds sterling and include fees.
| Date (2026) | Event | Tokens | Section 104 pool cost |
|---|---|---|---|
| 10 February | Buys 4 tokens | 4 | £120,000 |
| 15 June | Buys 2 tokens | 6 | £170,000 |
| 20 September | Sells 3 tokens for £105,000 | 3 | £85,000 |
Tax computation. No acquisitions fall on the sale date or in the nine days before it, so the disposal is matched with the pool. Allowable cost is £170,000 × 3/6 = £85,000. The chargeable gain is £105,000 less £85,000, which is £20,000, taxed at the company's Corporation Tax rate.
Accounts. Using average cost for derecognition, the carrying amount removed is also £85,000, so the profit on disposal in the accounts is £20,000. For simplicity, it assumes nil amortisation and shows the whole year-end write-down as impairment. At 31 December 2026 the price is £25,000 per token, so the remaining 3 tokens have a recoverable amount of about £75,000 against a carrying amount of £85,000. The company books an impairment loss of £10,000 in profit or loss.
Tax on the impairment. The section 104 pool cost stays at £85,000 for the remaining 3 tokens. The £10,000 impairment would normally be added back in the Corporation Tax computation, and the economic loss is recognised for tax only when the tokens are sold or a negligible value claim is made.
The Cryptoasset Reporting Framework is the OECD standard that HMRC has adopted for exchanges, brokers and other platforms. HMRC's page on who needs to report cryptoasset data explains that a business counts as a reporting cryptoasset service provider if it "transacts cryptoassets on behalf of users" or "provides a means for users to transact cryptoassets." Providers collect data during calendar year 2026 and, where required, "submit your first report between 1 January and 31 May 2027." They must also register with HMRC's online service by 31 January 2027.
The UK has extended CARF beyond the OECD minimum. HMRC's November 2025 policy paper says the measure "will require UK RCASPs to also collect information concerning UK resident customers," and the Cryptoassets Manual (CRYPTO49000) confirms that reporting covers customers resident in the UK.
For an SME that uses an exchange, the obligation is to supply details. HMRC's guidance on information you need to give to cryptoasset service providers lists the legal business name, main business address and, for UK companies, the company registration number. Some entities must also give details of their controlling persons. The guidance warns that inaccurate or missing details given to a UK provider can lead to "a penalty of up to £300," and HMRC's manual (CRYPTO49000) notes that a provider "may also refuse to provide further services to the customer."
The practical effect is that HMRC will hold platform data on disposals and values for 2026 onwards. Companies should reconcile exchange annual statements to the tax pool register before filing, so the return agrees with the data HMRC receives. Our guide to handling an HMRC tax investigation explains what follows a compliance check. US groups will see a parallel regime at home in broker reporting on Form 1099-DA.
VAT. Under CRYPTO45000, VAT is due in the normal way on goods or services sold for exchange tokens, valued at the sterling value of the tokens when the transaction takes place, and no VAT is due on the supply of the token itself. HMRC describes this treatment as provisional. If the business is VAT registered, those sales flow into the normal return under the digital record rules in our guide to Making Tax Digital for VAT.
Staking. HMRC covers staking at CRYPTO40250, and the analysis depends on the terms of each arrangement. For the US position on on-chain activity, see our separate guide to DeFi tax reporting.
Lost keys and failed platforms. HMRC has separate pages on losing private keys (CRYPTO41500) and negligible value claims (CRYPTO41450). In the accounts, the same events are impairment indicators and may lead to derecognition under paragraph 18.26 when no future economic benefits are expected.
FRS 102 paragraph 18.27 requires, for each class of intangible assets, the useful lives or amortisation rates and the reasons for them, the amortisation methods, and a reconciliation of carrying amount showing additions, disposals, revaluations, amortisation and impairment. Paragraph 18.28 adds the carrying amount and remaining amortisation period of any individually material intangible asset, plus any assets pledged as security. Where holdings are material, a short narrative on custody arrangements and price risk helps readers of the accounts.
A records pack that supports both the accounts and the tax return usually includes:
US owners setting up a UK subsidiary will find wider set-up issues in our article on expanding to the UK, and our guide to outsourcing accounting for UK businesses covers how bookkeeping and close work can be scoped.
Is crypto an intangible asset under FRS 102? For most SMEs, yes. Exchange tokens meet the FRS 102 definition of an identifiable non-monetary asset without physical substance, so they fall under Section 18. Tokens held for sale in the ordinary course of business are inventories under Section 13 instead.
Do UK companies pay Capital Gains Tax on crypto? No. Companies pay Corporation Tax on chargeable gains from tokens held as an investment, or on trading profits if the activity is a trade. Capital Gains Tax applies to individuals, including sole traders and individual partners.
Does CARF reporting apply to my company? Only if the company provides cryptoasset services, such as running an exchange or broking tokens for users. A company that simply buys and holds tokens on an exchange is a customer, so its duty is to give the platform accurate details.
Will the 28 October 2026 Budget change crypto tax? Rates and allowances quoted here are as of October 2026. Check the Budget documents on gov.uk for any changes to tax rates or CARF before relying on them.
Madras Accountancy provides bookkeeping, reconciliation, financial reporting support and tax preparation work for businesses and their accountants, including organising cryptoasset transaction records for month-end and year-end. To discuss your records, contact our team.
The section 4960 excise tax is 21% of nonprofit pay over $1M. From 2026 it covers all employees. See the medical carve-outs, Form 4720 and a worked example.
The paid family and medical leave tax credit is permanent from 2026. See the 12.5% to 25% rates, the premium option, the 6-month rule and how Form 8994 works.
Opportunity zones become permanent in 2027 under the One Big Beautiful Bill. See the new deferral, rural bonus, and the 2026 handoff.
