This article explains the best way to buy bitcoin through your limited company.
Yes, UK limited companies can invest in crypto like Bitcoin, Ethereum and Monero. HMRC has even given great clarity on how cryptocurrencies are taxed (more on that later).
So how do you buy crypto using your business funds?
Disclaimer: Cryptocurrencies are HIGH RISK and very volatile. When investing in Bitcoin you can end up losing ALL your money. See this warning issued by the FCA. Buy at your own risk. Full disclosure, I hodl some crypto. Not a big amount to make me rich or quit my job. I am not a die-hard crypto fan or against it for that matter.
With the disclaimers out of the way, let’s go!
Which platform to use for buying crypto through your limited company
When it comes to cryptocurrencies there are so many platforms around. But not many platforms offer corporate crypto accounts.
My preferred choice is Binance. On Binance, you can open a corporate account and invest in bitcoin and cryptos through your limited company.
The process is not very quick, due to the number of documents they need from your LTD company. If you’ve opened a corporate account for buying stocks & shares then you know what I’m talking about.
It’s not complicated, it just takes a bit of time to gather everything.
So why Binance? I like the fact they are a big company one of the leaders in the crypto space. They have an intuitive interface suitable for both novices and experts.
They also follow high-security standards, such as 2-factor authentication, and have a huge following in the crypto community. That doesn’t prevent them from being hacked but it’s always a good sign. They even run their own cryptocurrency BNB, BUSD (of course they do!).
Note: Coinbase also offers company accounts but you need to get accepted as “institutional investor”. Not sure they actually accept small businesses – I personally never heard back from them. I use them for buying crypto as a person (not company) and here’s my referral sign-up link where we both get a free £7 BTC bonus if you sign up (and thanks!). Binance offer a lot more crypto pairs than Coinbase and they’re cheaper too.
So let’s see how we can buy some crypto using company money.
How to buy Bitcoin through your limited company
Here are the detailed steps and what to look out for.
Step 1: Open a Binance Account
Head over to Binance and register for an account. Use my referral link to register and we will both receive a small crypto-cashback every time you make a trade.
Use your company e-mail if you have one and a strong password.
Step 2: Switch your account to Enterprise
You need to “Switch to an enterprise account” to declare this is a corporate account.
Go to Your Icon -> Click on your E-mail -> Settings -> Basic Info.
This is your profile page where you can verify your identity as a limited company. Click on the “Switch to an enterprise account” like the image:
Step 3: Verify your account
To buy crypto through your limited company you need to complete the verification process. This takes time but has to be done. There’s nothing complicated about it, though.
Here’s how the verification screen looks like. I will go through the documents one-by-one shortly.
To verify a Binance company account, they need the following details:
- Original Certificate of Incorporation and Business Registration
You’ve got the certificate of incorporation from when you registered your company. If you don’t have it, search for your company on Companies House and go to Filings. You can download it from there.
- Memorandum and Articles of Association
Same as 1.
- An official Company Report or other government documents which were issued within the last year, including a) a list of current directors (natural person), their nationalities/jurisdictions, passport numbers; b)a list of ultimate beneficial owners (natural person), their nationalities/jurisdictions, passport numbers, and their percentage of holdings, etc.
Go to companies house, search for your company, go to “More” and click Company Snapshot. They’ll need your credentials so if you don’t remember them just follow the “forget my password” to reset your password. Companies House will then give you an HTML file. Binance don’t accept HTML so you need to open it on your browser. Just open it using your browser -> Print (you won’t print) -> Save as PDF
- An ownership structure of your company
They offer a sample document which you need to download and fill out. But what they provide is not very helpful. What they should give is a doc with empty boxes in which you can type. You can use my templates if you want – 100% ownership or 50-50% ownership. I used the app Preview on a Mac to edit and draw the rectangles. You can also use Adobe PDF Edit PDF function to write text on my templates.
- Sanctions Questionnaire
That’s just another form asking you to declare you’re not dealing with any sanctioned countries. Straightforward.
- Authorisation letter
This basically authorises yourself to trade on behalf of the company. Binance once again offers a template which is not editable. You can use my template on Google Docs. Don’t ask me for permissions, use File -> Make a copy.
- Link to the government website
- A full screenshot from the government website which contains the current company details. Kindly also make sure the system clock on the desktop is included.
Oh well, ok, whatever.
Ok, if you’ve made it this far, you deserve to get rich trading crypto 🙂 Once you’re verified that is.
The verification is where you’ll spend 90% of your time. The rest of the steps is filling in some director’s details like address, full name etc and uploading an ID document. Most people here would be both the Director, the Authorised Trader and the Ultimate beneficial owner so the rest of the process is really quick. A few things to note.
Note #1: Be specific about the "Source of funds" and "Nature of business". You may be asked extra questions later.
Note #2: I faced "Facial recognition declined". My selfie was probably the issue. I took another one looking straight to the camera and it was fine. Your passport photo should also be clear and show the main page. You know.. the one with your photo on it.
Step 4: Complete the process
After submitting all documents and performing a quick verification using your camera, you’ll see this screen.
It doesn’t take 7 days!!! I was actually disappointed when I saw this message, but they only took a few hours to verify my account. Astonishing if you think I applied during the crypto hype and madness of late 2020. Perhaps Binance prioritise limited company accounts? Anyway, they sent me an e-mail a few hours later to say my account is good to go.
When I logged in, my account details screen looked like this.
However, when I went to the buy crypto screen, I was still unable to buy! After giving it a few hours, I received a Binance e-mail asking me some extra questions. They asked for proof of address (director), proof of address (company), source of funds questions and which currencies I intend to use. Look out for a “Fiat Corporate Onboarding” email just in case.
They also asked again for my Memorandum and articles of association. I just attached again the memorandum of association plus the Model Articles for private companies limited by shares from Companies House.
After 2 days I FINALLY could buy bitcoin using my UK limited company money…
I used the “Faster Payments” method as you see in the screen above to transfer some GBP into Binance. Deposits cost 0.02% of the value. So a £10,000 deposit costs £2 (minimum charge £1.50).
This is basically a normal bank transfer method where YOU HAVE to use the reference code they give you. They need to know it’s you making the payment.
I first made a small transfer of £100 to make sure it works, and voila! The £98.50 GBP reached my Binance account a few minutes later. I could then buy Bitcoin through my limited company account in a few clicks.
How cryptocurrencies like Bitcoin are taxed for UK limited companies
That’s the first question that comes to mind before purchasing. What tax do I pay on the bitcoin I bought through my limited company? What if I made a loss?
HMRC have now provided great clarity given how popular cryptos are lately! Perhaps HMRC employees are hodlers too. Reading.
If the activity concerning the exchange token is not a trading activity, and is not charged to Corporation Tax in another way (such as the non-trading loan relationship or intangible fixed asset rules) then the activity will be the disposal of a capital asset and any gain that arises from the disposal would typically be charged to Corporation Tax as a chargeable gain.
The main gist of it is that yes, you need to pay corporation tax on the profits. Similarly to most investments made through a limited company, only the tax gain part is subject to tax. In other words, if you bought £100 and sold £120, you need to pay 19% tax on £20 = £3.8.
You pay tax only in the tax year that you sold the investment, not if you just hold it.
Clever me thought: Ok, if I want out, I’ll just exchange BTC to USDT (the dollar equivalent “crypto”) and not pay any tax, ever, unless I withdraw fiat. USDT is crypto after all. But no, you need to pay tax even if you exchange crypto for another crypto. That’s considered disposal too!
Not bad if you’ve made a fortune on Bitcoin but still subject to tax.
There are some special rules for short-term trading (<30 days). See pooling rules – Exercise for the reader.
Reminder: If you are an individual, you’d still need to pay capital gains taxes on your crypto profits. That’s 10% tax (basic rate taxpayer) or 20% tax if you’re a higher/additional rate taxpayer.
- Cryptocurrency taxation for a UK limited company (HMRC, see corporation tax section)
- Cryptocurrency taxes for individuals (HMRC)
Happy crypto investing. I’d be interested in knowing your % of net worth allocated to crypto (before and after 2021!). Mine is just over 2%.
No. Buy a hardware wallet like the wallet Nano Ledger S (£54.00) and transfer your Bitcoin and other coins there. This is like a USB stick but only for crypto. You hold your private keys, you hold your crypto. Not an exchange.
Binance is a big well-known exchange. But there is always a small risk of getting hacked. It has happened before elsewhere. If you have a small allocation to Bitcoin, say <£1,000 perhaps it’s ok to leave it there. But for higher values, I would purchase a hardware wallet.
The last thing you want is to see your crypto get stolen as it happened with my Nano coins on another exchange (BitGrail) 2 years back.
Binance is one of the cheapest ways to buy crypto as a limited company.
GBP Deposits and withdrawals cost 0.02% (£1.50 minimum). Once you’ve got money in, there’s a 0.075% fee for buying/selling crypto. That is £0.75 for every £1,000 purchase. Not bad at all!
No, this is treated as a director’s loan to you with all the negative effects this comes with. You can take a director’s loan up to £10,000 tax-free as long as you repay it within 9 months of the end of your Corporation Tax accounting period.
Be careful with crypto and as always, do your own research!
Use my Binance Sign-up Link to get a small crypto cashback when you trade.
If you liked this article, feel free to share it with someone who owns a Limited Company and told you “I told you so” in 2017.