How To Set Up An LTD Company For Crypto Taxes in the UK

Last Updated on 1 month by Komolafe Bamidele

As cryptocurrency adoption grows, more investors and businesses are looking for legal ways to optimize their tax liabilities. 

Setting up a Limited Company (LTD) is one of the best ways to manage crypto-related taxes in the UK. Whether you are a trader, investor, or miner, forming an LTD can offer financial and legal advantages.

In this guide, we’ll cover everything you need to know about setting up an LTD company for crypto taxes, including how to register, tax implications, benefits, and legal considerations.

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Why Set Up an LTD Company for Crypto Taxes?

Many crypto traders and investors operate as individuals, meaning they are liable for Capital Gains Tax (CGT) or Income Tax on their profits. However, operating under an LTD company can provide benefits such as:

• Lower Corporate Tax Rates: Companies pay 19% Corporation Tax instead of up to 45% personal Income Tax.
• Limited Liability Protection: Your personal assets are safeguarded.
• Professional Business Image: Enhances credibility for partnerships and banking.
• Potential Tax Deductions: Expenses like software subscriptions, exchange fees, and professional services can be claimed.

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How to Set Up an LTD Company for Crypto Taxes (Step-by-Step)

Step 1: Register Your LTD Company

1. Choose a Company Name: Select a unique and professional name for your business. Check Companies House to ensure it’s available and adheres to UK regulations.
2. Appoint Directors & Shareholders: An LTD company requires at least one director, who can also be the sole shareholder. If you plan to bring in partners or investors, decide on the share distribution accordingly.
3. Decide on Share Structure: The most common structure is 100 ordinary shares at £1 each, but this can be customized depending on the number of shareholders and investment requirements.
4. Prepare Your SIC Code: The Standard Industrial Classification (SIC) code is used to define your business activities. For cryptocurrency-related businesses, the most relevant SIC code is 62090 (Other Information Technology Service Activities). If your business has multiple functions, you may need additional SIC codes.
5. Register with Companies House: Submit your company registration online through Companies House. The standard fee is £50, and the process is usually completed within 24-48 hours.

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Step 2: Open a Business Bank Account

After your LTD company is officially registered, you’ll need a business bank account to separate company funds from personal assets. 

Many traditional banks have restrictions on crypto-related businesses, but there are some crypto-friendly options:

• Revolut Business – Offers multi-currency accounts and seamless integration with exchanges.
• Cashaa – Specializes in crypto banking, offering accounts that support fiat and digital assets.
• Barclays Business – A good option for larger crypto businesses looking for traditional banking.
• Bank Frick – A European bank that caters to blockchain-based businesses.

When choosing a bank, check whether they allow crypto transactions, as some banks restrict deposits from exchanges.

Step 3: Register for Taxes (Corporation Tax & VAT, if needed)

Once your LTD company is operational, you must register for taxes with HMRC. This includes:

1. Corporation Tax (CT) – Every LTD company in the UK must register for Corporation Tax within three months of starting business operations.

 You’ll receive a Unique Taxpayer Reference (UTR), which is required for filing annual returns.

1. VAT Registration (if applicable) – If your company’s annual revenue exceeds £85,000, you must register for VAT. While cryptocurrency trading is generally VAT-exempt, other services like consulting, software sales, or educational content may require VAT compliance.
2. PAYE Registration – If you plan to hire employees or pay yourself a salary, you must register for Pay As You Earn (PAYE) to handle Income Tax and National Insurance contributions.

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Step 4: Set Up Accounting & Bookkeeping

Proper bookkeeping is essential for tracking your crypto transactions, business expenses, and tax obligations. 

Since crypto transactions can be complex, using specialised accounting software is recommended:

• Xero – Ideal for small businesses, offering integrations with crypto platforms.
• QuickBooks – A user-friendly option for general bookkeeping.
• Koinly – Designed for crypto traders, automatically calculating gains, losses, and tax liabilities.
• CoinTracking – Another great option for crypto-focused accounting.

Best Practices for Crypto Accounting:

✅ Maintain records of all transactions, including exchange trades, wallet transfers, and fiat conversions.

✅ Keep track of receipts for business expenses, such as exchange fees and software subscriptions. 

✅ Use crypto-friendly accountants who understand HMRC regulations on digital assets.

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Tax Implications for Crypto LTD Companies

1. Corporation Tax (19%)

Your LTD company will pay 19% tax on net profits. This is significantly lower than the 40-45% personal income tax some traders face.

2. Capital Gains Tax (CGT) Considerations

While companies do not pay CGT, they pay Corporation Tax on all crypto trading profits. This makes LTD companies more tax-efficient than individual trading.

3. Income Tax (For Salaries & Dividends)

• If you pay yourself a salary, you’ll pay Income Tax & National Insurance.
• If you withdraw profits as dividends, they are taxed at 8.75% (basic rate) or 33.75% (higher rate).

4. VAT on Crypto Transactions

• Cryptocurrencies themselves are VAT-exempt.
• However, if you offer crypto services (consulting, education), you may need to charge VAT (20%).

Pros & Cons of Running a Crypto Business Through an LTD

✅ Pros:

✔️ Lower tax rates than individual trading. 

✔️ Legal protection for personal assets. 

✔️ Greater credibility and access to financial services. 

✔️ Ability to claim business expenses and deductions.

❌ Cons:

❌ More administrative work (filing taxes, maintaining records). 

❌ Company funds are separate from personal funds.

 ❌ Need to comply with HMRC’s reporting requirements.

Common Questions About LTD Companies & Crypto Taxes

Can I File My Own Crypto Taxes?

Yes, but it’s complex. Software like Koinly or CoinTracker can help, but a crypto accountant is recommended.

What Records Do I Need to Keep?

• Transaction dates and amounts
• Purchase and selling price of crypto
• Wallet & exchange statements
• Business-related expenses

How Do I Pay Myself From My LTD Company?

You can pay yourself through:

1. Salary: Deducted before Corporation Tax but subject to Income Tax & NI.
2. Dividends: More tax-efficient but taxed at 8.75%-33.75%.

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Conclusion

Setting up an LTD company for crypto activities in the UK can provide significant tax benefits and legal protections. However, it requires proper financial management and compliance with HMRC.

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