Will holding bitcoin affect my company's trading status?

Last checked 12 November 2026. This page is a map of tests that already have deeper guides on this site. It is education, not advice, and it does not say how any of the tests apply to a particular company. If anything here conflicts with a linked source, the source wins. Ask your own tax adviser before a holding grows.

A note on listed-company indexes

In October and November 2026, MSCI said it would treat some non-operating companies as ineligible for its Global Investable Market Indexes. The method uses a screen for substantial operating assets, then financial-ratio tests, and takes effect with the November 2026 Index Review. That is a listed-index methodology for companies that are, or want to be, in those indexes. It is not the same as the UK or US tax tests on this page, which can apply to a private company of any size. This page is about those tax tests.

Source: MSCI: Results of the consultation on the eligibility of non-operating companies in the MSCI Global Investable Market Indexes, 15 October 2026, MSCI: Final impact list of the non-operating companies methodology, 11 November 2026.

UK: three tests that ask if the company is trading

Three UK rules come up often when a company holds bitcoin as treasury. They share an idea, trading versus investment, but they use different words and they apply at different moments. A result on one test does not decide the others.

Business Asset Disposal Relief and the 20% indicator

GOV.UK says that to qualify for Business Asset Disposal Relief on selling shares, for at least two years up to the sale the seller must be an employee or office holder and the company's main activities must be in trading rather than non-trading activities such as investment. There are also personal company conditions, including at least 5% of the shares and voting rights.

Source: GOV.UK: Business Asset Disposal Relief: eligibility.

HMRC's Capital Gains Manual says there is no simple formula for whether non-trading activities are substantial. Its indicators include the value of non-trading assets compared with total assets, and it says that where neither non-trading income nor the asset base suggests the non-trading element exceeds 20%, a case is unlikely to need more detailed review. The 20% figure is an indicator in that manual, not a statutory threshold.

Source: HMRC: CG64090: trading company, meaning of substantial (the 20% indicator).

Our judgement, not a rule: a large bitcoin holding kept as an investment could count towards non-trading assets in that test. A company that expects to rely on the relief should ask its accountant before the holding grows, not at the point of sale. The fuller note, including the personal company conditions, is on selling a company that holds bitcoin.

Business Relief for Inheritance Tax

Business Relief can reduce the value of shares in a trading company for Inheritance Tax. Section 105 of the Inheritance Tax Act 1984 excludes relevant business property where the business consists wholly or mainly of dealing in securities, stocks or shares, dealing in land or buildings, or making or holding investments (with limited exceptions).

Source: legislation.gov.uk: Inheritance Tax Act 1984, section 105: relevant business property, including the exclusion for businesses that consist wholly or mainly of making or holding investments.

HMRC's manuals add three points that matter for a company that holds bitcoin:

• Investment businesses. Relief is not due where the business consists wholly or mainly of making or holding investments.
• Wholly or mainly. HMRC looks at the main activities, assets and sources of income or gains over a reasonable period before the transfer, in the round.
• Excepted assets. Even where relief is due, assets that were not used for the business, or required for its future use, can be left out of the relief.

Source: HMRC: IHTM25261: business relief, investment businesses, HMRC: IHTM25265: business relief, the wholly or mainly test, HMRC: IHTM25351: business relief, excepted assets.

From 6 April 2026, 100% relief on the combined value of qualifying business and agricultural property is limited by an allowance. HMRC says that for individuals who die on or after that date, the allowance is £2.5 million, and value above it gets relief at 50%. The owner's estate guide sets this out, with the spouse or civil partner rules.

Source: HMRC: IHTM25510: the 100% agricultural and business relief allowance from 6 April 2026.

Our judgement, not a rule: a trading company that holds a modest amount of bitcoin as surplus treasury may still be a trading company, but the bitcoin itself may be treated as an excepted asset. A company whose bitcoin has grown to dominate its balance sheet may be at risk of being seen as mainly holding investments. See the owner's estate.

Close investment-holding companies

Under section 18N of the Corporation Tax Act 2010, a close company is a close investment-holding company in an accounting period unless, throughout the period, it exists wholly or mainly for one or more permitted purposes. Those purposes include carrying on a trade on a commercial basis, making investments in land let commercially, holding shares in and making loans to companies it controls that themselves trade or let land commercially, and co-ordinating the administration of two or more such companies.

Source: legislation.gov.uk: Corporation Tax Act 2010, section 18N: close investment-holding companies and the permitted purposes.

That matters because section 18A charges the small profits rate only on a company that is not a close investment-holding company, and GOV.UK says a close investment-holding company cannot claim marginal relief. In practice such a company pays the main rate on all its taxable profits, including its chargeable gains. The current rates are on GOV.UK.

Source: legislation.gov.uk: Corporation Tax Act 2010, section 18A: the small profits rate is not available to a close investment-holding company, GOV.UK: Marginal Relief for Corporation Tax: who cannot claim, including close investment-holding companies, GOV.UK: Corporation Tax rates, expenses and reliefs.

A separate company that does nothing but hold bitcoin does not appear to fit any permitted purpose, unless an adviser finds otherwise on the facts. A holding company that exists to hold the shares of a trading subsidiary can fit the permitted purposes, but if it also holds bitcoin the question is whether it still exists wholly or mainly for those purposes. Section 18N does not give a percentage. The longer explanation, with the three common group shapes, is on group and holding company structures. The term is also in the glossary.

US: three tests that can be affected by a holding

The US rules below are from the Internal Revenue Code. They are not a single "trading status" test. Each has its own conditions, and a bitcoin holding can touch them in different ways.

Personal holding company tax

Section 541 imposes a 20% tax on the undistributed personal holding company income of a personal holding company. Under section 542, a corporation is one if at least 60% of its adjusted ordinary gross income is personal holding company income and, at any time in the last half of the year, more than 50% of its stock by value is owned, directly or indirectly, by five or fewer individuals. Most small companies meet the ownership test, so the income test often decides it.

Source: GovInfo: 26 U.S.C. 541: personal holding company tax (United States Code, 2024 edition), GovInfo: 26 U.S.C. 542: definition of a personal holding company (United States Code, 2024 edition).

Section 543 defines ordinary gross income as gross income excluding all gains from the sale or other disposition of capital assets, and lists dividends, interest, royalties and annuities as personal holding company income. So gains on selling bitcoin held as a capital asset do not count either way. Interest does. A bitcoin company with no trade whose only regular income is interest, for example from lending bitcoin or holding cash on deposit, may meet the 60% test. That is a reason to ask before setting up a company whose only activity is holding bitcoin. The group-level note is on group and holding company structures.

Source: GovInfo: 26 U.S.C. 543: personal holding company income (United States Code, 2024 edition).

Accumulated earnings tax

Section 531 imposes an extra 20% tax on a corporation's accumulated taxable income if it keeps earnings beyond the reasonable needs of the business to avoid tax for its shareholders. Publication 542 says a corporation can generally accumulate $250,000 without showing a reasonable need, or $150,000 for certain service businesses, such as health, law, accounting and consulting.

Source: GovInfo: 26 U.S.C. 531: accumulated earnings tax (United States Code, 2024 edition), IRS: Publication 542, Corporations, including the accumulated earnings tax.

Section 535(c)(3) says a mere holding or investment company does not get the credit for earnings retained for the reasonable needs of the business; it gets only the minimum credit. Retaining profits to buy bitcoin is not, on its own, a reasonable business need, so a board that holds a growing reserve should be able to explain the business reason in the minutes. The C corporation page and the holding company page cover this in more detail: bitcoin for a US C corporation and accumulated earnings in a holding company.

Source: GovInfo: 26 U.S.C. 535: accumulated taxable income and the accumulated earnings credit (United States Code, 2024 edition).

QSBS and the 80% active business test

Section 1202 can let a non-corporate shareholder exclude some or all of the gain on selling qualified small business stock in a C corporation, if many conditions are met. One of those conditions is about how the company uses its assets. During substantially all of the shareholder's holding period, at least 80% by value of the company's assets must be used in the active conduct of one or more qualified trades or businesses. Working capital can count towards that test for a time, with limits after the second year. A large bitcoin holding that is not used in the trade can make the 80% test harder to meet.

Source: GovInfo: 26 U.S.C. 1202: partial exclusion for gain from certain small business stock (United States Code, 2023 edition).

A search of IRS.gov digital-asset guidance, last checked 1 November 2026 on the QSBS page and not re-opened as a new bitcoin-specific QSBS rule for this page, did not find QSBS-specific bitcoin guidance. The questions to take to a tax adviser, including working capital and an investing-business risk, are on QSBS and company bitcoin.

What to take to an adviser

These questions are a starting list, not a complete brief:

• Which of these tests, if any, could apply to this company or to its shareholders, and on what date?
• How would a bitcoin holding of the size proposed count in assets, income and time spent?
• Does the answer change if bitcoin is received as payment for goods or services, rather than bought as treasury?
• Is a separate company whose only activity is holding bitcoin better or worse, once rates, associated-company rules and running costs are modelled?
• What cap, if any, should the treasury policy set so that a later sale or an estate claim is not put at risk?
• What records should the board keep to show why the company exists and how it uses its assets?

Our judgement, not a rule: ask before the first purchase if any of these reliefs or taxes matter, and ask again if the holding grows. Write the advice into the board paper and the treasury policy.

Read next

• Selling a company that holds bitcoin: Business Asset Disposal Relief and the 20% indicator.
• The owner's estate: Business Relief, the wholly or mainly test and excepted assets.
• Group and holding company structures: close investment-holding companies, personal holding company tax and accumulated earnings.
• QSBS and company bitcoin: section 1202 and the 80% active business test.
• Bitcoin for a US C corporation: the accumulated earnings tax in a single company.
• Close investment-holding company: the glossary entry.

Sources

Primary sources only. Each link was checked on 11 November 2026. Rules change, so confirm the current version with your adviser.

1. eCFR31 CFR 1010.350: Reports of foreign financial accounts
2. FinCENReport of Foreign Bank and Financial Accounts
3. IRSComparison of Form 8938 and FBAR requirements
4. IRSInstructions for Form 8938, Statement of Specified Foreign Financial Assets
5. FinCENNotice 2020-2: FBAR filing requirement for virtual currency (PDF, 31 December 2020)
6. IRSAbout Form 8938
7. IRSNotice 2014-21: virtual currency is treated as property for federal tax purposes (PDF)
8. IRSDigital assets
9. legislation.gov.ukCompanies Act 2006, section 830: distributions only out of profits available for the purpose
10. legislation.gov.ukCompanies Act 2006, section 845: distributions in kind, determination of amount
11. legislation.gov.ukCompanies Act 2006, section 846: distributions in kind, treatment of unrealised profits
12. HMRCCRYPTO41050: Corporation Tax, introduction
13. HMRCCRYPTO41200: Corporation Tax on chargeable gains, introduction
14. HMRCCRYPTO41250: what constitutes a disposal
15. HMRCCRYPTO41300: allowable costs
16. Cornell LII26 U.S.C. 317: property defined for this part
17. Cornell LII26 U.S.C. 301: distributions of property
18. Cornell LII26 U.S.C. 316: dividend defined
19. Cornell LII26 U.S.C. 311: taxability of corporation on distribution
20. Delaware Code8 Del. C. 173: declaration and payment of dividends
21. Delaware Code8 Del. C. 170: dividends; payment
22. Bitcoin Improvement ProposalsBIP 329: Wallet Labels Export Format (status: Draft, informational)
23. GOV.UKAccounts and tax returns for private limited companies: annual accounts usually 9 months after the year end
24. GOV.UKPay your Corporation Tax bill: usually 9 months and 1 day after the end of the accounting period
25. GOV.UKCompany Tax Returns: the return is due 12 months after the end of the accounting period
26. IRSInstructions for Form 1120: when to file
27. IRSInstructions for Form 1120-S: when to file
28. MSCIResults of the consultation on the eligibility of non-operating companies in the MSCI Global Investable Market Indexes, 15 October 2026
29. MSCIFinal impact list of the non-operating companies methodology, 11 November 2026
30. GOV.UKBusiness Asset Disposal Relief: eligibility
31. HMRCCG64090: trading company, meaning of substantial (the 20% indicator)
32. legislation.gov.ukInheritance Tax Act 1984, section 105: relevant business property, including the exclusion for businesses that consist wholly or mainly of making or holding investments
33. HMRCIHTM25261: business relief, investment businesses
34. HMRCIHTM25265: business relief, the wholly or mainly test
35. HMRCIHTM25351: business relief, excepted assets
36. HMRCIHTM25510: the 100% agricultural and business relief allowance from 6 April 2026
37. legislation.gov.ukCorporation Tax Act 2010, section 18N: close investment-holding companies and the permitted purposes
38. legislation.gov.ukCorporation Tax Act 2010, section 18A: the small profits rate is not available to a close investment-holding company
39. GOV.UKMarginal Relief for Corporation Tax: who cannot claim, including close investment-holding companies
40. GOV.UKCorporation Tax rates, expenses and reliefs
41. GovInfo26 U.S.C. 541: personal holding company tax (United States Code, 2024 edition)
42. GovInfo26 U.S.C. 542: definition of a personal holding company (United States Code, 2024 edition)
43. GovInfo26 U.S.C. 543: personal holding company income (United States Code, 2024 edition)
44. GovInfo26 U.S.C. 531: accumulated earnings tax (United States Code, 2024 edition)
45. IRSPublication 542, Corporations, including the accumulated earnings tax
46. GovInfo26 U.S.C. 535: accumulated taxable income and the accumulated earnings credit (United States Code, 2024 edition)
47. GovInfo26 U.S.C. 1202: partial exclusion for gain from certain small business stock (United States Code, 2023 edition)