How a company funds a bitcoin purchase

Sources checked 10 November 2026. This page is education for companies that are considering how to pay for a bitcoin purchase. It is not advice on tax, company law or how to raise money, and it is not a recommendation to buy, sell or hold bitcoin. Rules change, and they depend on the company's facts. Confirm the current position with your accountant and, where needed, your lawyer. If anything here conflicts with a linked source, the source wins.

Three ways to fund the purchase

The same three sources appear in both countries, under slightly different names. A company may use more than one. What matters is that each pound or dollar is identified, so a later reader of the books can see where it came from.

Buying bitcoin does not, by itself, create a tax bill in either country. Tax usually looks at what happens when the company later sells, swaps or spends the bitcoin. See company tax on bitcoin. The funding route can still have its own tax and filing consequences, which is why it belongs in the board paper and the books before the first payment leaves the company account. For the purchase itself, see buying bitcoin as a company.

Source: HMRC: CRYPTO41200: Corporation Tax on chargeable gains, introduction.

Choose your country for the rules that apply.

UK: retained profits

Most small companies that buy a modest amount of bitcoin will do so from cash they already hold. The company is a separate legal entity from its owners and directors, so that cash is the company's, not the director's. GOV.UK says there must be a clear division between the company's finances and those of the owners and directors, and that company banking must be separate from personal banking.

Source: GOV.UK: Running a limited company: company and accounting records.

Using retained profits is not a tax event by itself. HMRC looks at what happens when the company disposes of the bitcoin, not at the moment company cash is exchanged for it. The board still needs to be satisfied that the company can meet its obligations after the purchase. A written sizing cap, a treasury policy and a board paper are the usual way to show that thought. This is about directors' duties and records, not a special Corporation Tax rule for the purchase.

Source: HMRC: CRYPTO41200: Corporation Tax on chargeable gains, introduction, legislation.gov.uk: Companies Act 2006, section 172: duty to promote the success of the company.

UK: new share capital

HMRC distinguishes a subscription for new shares from a purchase of shares that already exist. On a subscription, the proceeds go to the company and form part of its capital. On a purchase of existing shares, the proceeds belong to the seller. Only the first of those funds a company purchase.

Source: HMRC: CG50285: subscription for new shares, where the proceeds go to the company, versus a purchase of existing shares.

To issue share capital, the directors must have the power to allot shares. HMRC's Corporate Finance Manual records that, for a private company with only one class of share, that power may be granted by a shareholder resolution under section 550 of the Companies Act 2006, and is then unlimited in time or amount. Otherwise the directors may be given a power under section 551, for a maximum of five years and up to a stated amount. Older companies may still have a limit on authorised share capital, although that requirement was repealed on 1 October 2009.

Source: HMRC: CFM11020: raising finance by issuing shares, and the power to allot under the Companies Act 2006.

Once shares are allotted, section 555 of the Companies Act 2006 requires a limited company to deliver a return of allotment to the registrar within one month, with a statement of capital. Companies House provides form SH01 for that return, and an online filing service.

Source: legislation.gov.uk: Companies Act 2006, section 555: return of allotment of shares, to be delivered within one month, Companies House: Return of allotment of shares (SH01), the form used to give notice of shares allotted after incorporation.

Existing shareholders have a statutory right of pre-emption. Section 561 of the Companies Act 2006 says a company must not allot equity securities unless it has first offered them, on the same or more favourable terms, to each holder of ordinary shares in proportion to their existing holding, and that offer has expired or been accepted or refused. For a private company with only one class of shares, section 569 allows the directors to be given power, by the articles or by a special resolution, to allot equity securities of that class as if section 561 did not apply, or applied with such modifications as the directors may determine.

Source: legislation.gov.uk: Companies Act 2006, section 561: existing shareholders' right of pre-emption, legislation.gov.uk: Companies Act 2006, section 569: disapplication of pre-emption rights for a private company with only one class of shares.

Share issues under the Enterprise Investment Scheme or the Seed Enterprise Investment Scheme have extra conditions on what the money may be used for. For EIS, section 175 of the Income Tax Act 2007 requires the money raised to be employed wholly for the qualifying business activity for which it was raised, generally by the end of two years from the issue of the shares, or, where the money is raised only to prepare to carry on a trade, two years from the later of the issue and the start of that trade. For SEIS, section 257CC requires the money to be spent for the purposes of that qualifying business activity before the end of period B, which section 257AC defines as beginning with the issue of the shares and ending immediately before the third anniversary of the issue. GOV.UK describes that qualifying activity as a qualifying trade, preparing to carry one on, or research and development expected to lead to one. Holding bitcoin as a treasury reserve is unlikely to meet those use-of-money rules. This is education, not a decision on whether a particular raise qualifies. Ask your accountant before treating an EIS or SEIS subscription as the funding for a bitcoin purchase.

Source: legislation.gov.uk: Income Tax Act 2007, section 175: EIS use of the money raised requirement, including the two-year limit, GOV.UK: Apply to use the Enterprise Investment Scheme: what you can do with money raised, including spending within two years, legislation.gov.uk: Income Tax Act 2007, section 257CC: SEIS spending of the money raised requirement, legislation.gov.uk: Income Tax Act 2007, section 257AC: SEIS meaning of period A and period B, ending the day before the third anniversary of issue, GOV.UK: Apply to use the Seed Enterprise Investment Scheme: money raised must be spent within three years of the share issue.

The board minute should record the authority to allot, whether pre-emption rights apply or have been disapplied, the number and class of shares, the amount paid, and that the money is to fund the approved bitcoin purchase (or a stated part of it). Keep the resolution, the bank evidence of the subscription money arriving in a company account, and the Companies House filing with the company's records.

UK: a director lending money to the company

GOV.UK and the Insolvency Service both say that if you personally lend money to your company, you must record it in your director's loan account. HMRC's National Insurance Manual describes that account as the company's record of transactions with the director. It can be in credit, meaning the company owes the director, or overdrawn (in debit), meaning the director owes the company.

Source: GOV.UK: Director's loans: overview, including the director's loan account and credit or overdrawn balances, GOV.UK (The Insolvency Service): Director information hub: loans and funding, including recording a loan to the company on the director's loan account, HMRC: NIM12016: director's loan accounts, credit and debit balances, and what the account records.

When the director lends money so that the company can buy bitcoin, the account should go into credit, or further into credit, by the amount lent. At the end of the financial year, GOV.UK says any money the company owes the director, or the director owes the company, must be included on the balance sheet in the annual accounts.

Source: GOV.UK: Director's loans: overview, including the director's loan account and credit or overdrawn balances.

The company does not pay Corporation Tax on money a director lends it. If the director charges interest, that interest is a business expense for the company and personal income for the director, who must report it on a Self Assessment tax return. The duty to deduct Income Tax under section 874 of the Income Tax Act 2007 applies only to yearly interest. GOV.UK describes the deduction, where the duty applies, as 20%. HMRC's Savings and Investment Manual says there is no statutory definition of yearly interest: interest on a loan intended to last a year or more is likely to be yearly, and interest on a loan for less than a year is usually treated as short interest, but the parties' intention matters more than a mechanical time test. Where the duty applies, the company reports and pays the tax on form CT61. HMRC's Company Taxation Manual sets the CT61 return periods as periods of up to three months ending on 31 March, 30 June, 30 September, 31 December or at the end of the accounting period, and says both the return and the tax are due within 14 days of the end of the return period.

Source: GOV.UK: Director's loans: if you lend your company money, Corporation Tax, interest and form CT61, legislation.gov.uk: Income Tax Act 2007, section 874: duty to deduct a sum representing income tax from certain payments of yearly interest, HMRC: SAIM9070: deduction of tax from yearly interest, including that the duty applies only to yearly interest, HMRC: SAIM9075: case law on short and yearly interest, including the parties' intention, HMRC: CTM35110: CT61 return periods and the 14-day filing deadline, HMRC: CTM35120: Income Tax on a CT61 payment is due within 14 days of the end of the return period.

If interest payable to a participator in a close company is not paid within 12 months after the end of the accounting period in which it would otherwise accrue, and the corresponding credit is not brought into account, sections 373 and 375 of the Corporation Tax Act 2009 treat that interest as not accruing until it is paid, so the company cannot deduct it earlier.

Source: legislation.gov.uk: Corporation Tax Act 2009, section 373: late interest treated as not accruing until paid in some cases, legislation.gov.uk: Corporation Tax Act 2009, section 375: late interest, loans to close companies by participators.

A loan still has to be repaid, and the Insolvency Service reminds directors to think carefully about whether the company will be able to repay. Put the amount, any interest, and the repayment terms in the board minute, and keep the bank evidence of the money arriving in the company account.

Source: GOV.UK (The Insolvency Service): Director information hub: loans and funding, including recording a loan to the company on the director's loan account.

UK: why a company lending to a director is a different situation

The section 455 charge works in the other direction. It applies where a close company makes a loan or advance to a participator (or an associate of a participator), not where a participator lends money to the company. HMRC's Company Taxation Manual says the charge applies only if the company is a close company at the time the loan or advance is made. GOV.UK uses "shareholder" and "participator" together on its director's loans pages, because most owner-managed companies are dealing with shareholder-directors.

Source: HMRC: CTM61505: close companies, loans to participators, the s455 charge and the rate, legislation.gov.uk: Corporation Tax Act 2010, section 455: charge to tax in case of loan to participator, GOV.UK: Director's loans: overview, including the director's loan account and credit or overdrawn balances.

Section 455 of the Corporation Tax Act 2010 charges the company, as if it were Corporation Tax, an amount equal to the dividend upper rate in section 8(2) of the Income Tax Act 2007 for the tax year in which the loan or advance is made. Finance Act 2026, section 4, set that dividend upper rate at 35.75% for the tax year 2026-27 and later years. HMRC's manual records the same figure for loans made on or after 6 April 2026, and 33.75% for loans made on or after 6 April 2022. The public GOV.UK page "If you owe your company money", checked on 10 November 2026, still describes the 33.75% and 32.5% rates and does not yet mention 35.75%. For a loan made on or after 6 April 2026, use the rate in the legislation and the manual, and ask your accountant to confirm it.

Source: legislation.gov.uk: Corporation Tax Act 2010, section 455: charge to tax in case of loan to participator, legislation.gov.uk: Finance Act 2026, section 4: dividend ordinary and upper rates for 2026-27, including 35.75%, HMRC: CTM61505: close companies, loans to participators, the s455 charge and the rate, GOV.UK: Director's loans: if you owe your company money, including form CT600A and benefit in kind rules.

The tax is due on the day following the end of the period of nine months from the end of the accounting period in which the loan or advance was made. If the loan is repaid, released or written off within nine months of the end of that period, the company can be entitled to relief and may not have to pay the charge. Later repayment can still lead to relief, but not immediately. GOV.UK also says to report the amount owed on form CT600A.

Source: legislation.gov.uk: Corporation Tax Act 2010, section 455: charge to tax in case of loan to participator, GOV.UK: Director's loans: if you owe your company money, including form CT600A and benefit in kind rules, HMRC: CTM61505: close companies, loans to participators, the s455 charge and the rate.

There can also be income tax consequences for the individual. If a shareholder-director owes the company more than £10,000 at any time in the year, GOV.UK says the company must treat the loan as a benefit in kind and deduct Class 1 National Insurance, and the director may have to pay tax by reference to the official rate of interest. Interest charged below the official rate can also be a benefit in kind. HMRC notes that a beneficial loan to a director or employee can give rise to an employment income charge as well as any s455 charge on the company.

Source: GOV.UK: Director's loans: if you owe your company money, including form CT600A and benefit in kind rules, HMRC: CTM61505: close companies, loans to participators, the s455 charge and the rate.

None of that is triggered merely because the company buys bitcoin with its own cash, or because a director lends money to the company. It is triggered when the company is the lender and a participator is the borrower, including where a director's loan account is overdrawn. Mixing personal and company money, or paying for bitcoin from a personal account and leaving the reimbursement unrecorded, is how an intended credit balance can quietly become an overdrawn one. Keep the two directions distinct in the minute and on the loan account.

Company law is a separate layer. Section 197 of the Companies Act 2006 says a company may not make a loan to a director of the company or of its holding company, or give a guarantee or security in connection with such a loan, unless the members have approved it by a resolution. A memorandum must be made available first, setting out the nature of the transaction, the amount and purpose of the loan, and the extent of the company's liability under any connected transaction. Section 207 disapplies that approval, and the related rules in sections 198 and 200, if the aggregate value of the transaction and any other relevant transactions or arrangements does not exceed £10,000. Even where approval is not required, section 413 requires details of advances and credits granted by the company to its directors, including the amount, an indication of the interest rate, the main conditions, and amounts repaid, written off or waived, to be shown in the notes to the accounts.

Source: legislation.gov.uk: Companies Act 2006, section 197: loans to directors, requirement of members' approval, legislation.gov.uk: Companies Act 2006, section 207: exception for minor and business transactions, including the £10,000 loan threshold, legislation.gov.uk: Companies Act 2006, section 413: notes to the accounts, information about directors' benefits, advances, credit and guarantees.

UK: the board minute and the bookkeeping evidence

Section 248 of the Companies Act 2006 requires every company to record minutes of all proceedings at meetings of its directors, and to keep those records for at least ten years from the date of the meeting. The board paper outline sets out what the paper and the minute should cover. For a funding decision, the minute should say which of the three sources is being used, the amount, and that the money is to fund a bitcoin purchase within the approved policy and cap.

Source: legislation.gov.uk: Companies Act 2006, section 248: minutes of directors' meetings.

GOV.UK requires a company to keep accounting records of all money received and spent, details of assets owned, and debts the company owes or is owed, plus the documents needed to prepare the annual accounts and the Company Tax Return, such as bank statements, invoices and correspondence. Records must generally be kept for six years from the end of the last company financial year they relate to, and longer in the cases GOV.UK lists. HMRC may check the records. You can be fined £3,000 by HMRC, or disqualified as a director, if you do not keep accounting records.

Source: GOV.UK: Running a limited company: company and accounting records.

In practice, keep together:

• The board paper and the signed minute, including any declaration of a director's interest in a loan or share issue.
• For retained profits: the cash position used in the paper, and the bank statements for each payment to the provider.
• For a share issue: the authority to allot, any pre-emption offer or the special resolution or articles that disapplied it, evidence of the subscription money arriving, and the SH01 or online return of allotment.
• For a director's loan: the updated director's loan account, the bank evidence of the advance, and any interest or CT61 records.
• The usual purchase pack: trade confirmation, withdrawal records and the wallet evidence, as on banking and source of funds.

US: retained earnings

As in the UK, many companies will buy bitcoin with cash already on the balance sheet. That is a use of retained earnings, not a new contribution and not a loan. For federal tax, Notice 2014-21 treats virtual currency as property, and a taxable event generally needs a sale, exchange or other disposition. The purchase itself is an exchange of cash for property, and the company takes a cost basis in the bitcoin it buys. See company bitcoin tax in the US and US accounting under ASU 2023-08.

Source: IRS: Notice 2014-21: virtual currency is treated as property for federal tax purposes.

A C corporation can also face an accumulated earnings tax of 20% if it allows earnings to accumulate beyond the reasonable needs of the business so that shareholders can avoid tax. Publication 542 describes that tax, the $250,000 and $150,000 safe-harbour amounts, and the need for a bona fide business reason. This page does not decide whether a bitcoin reserve is such a reason. The C corporation page sets out the rule and why the board should document the purpose of any growing reserve. S corporations, partnerships and LLCs are not taxed in the same way; see the entity pages linked below.

Source: IRS: Publication 542, Corporations (January 2024): capital contributions, below-market loans and recordkeeping.

US: a capital contribution

Publication 542 says that, generally, contributions to the capital of a corporation, whether or not by shareholders, are paid-in capital, and that these contributions are not taxable to the corporation. (It also lists later exceptions for certain nonshareholder contributions, such as contributions in aid of construction, which are not the usual case for a small company funding a treasury purchase.)

Source: IRS: Publication 542, Corporations (January 2024): capital contributions, below-market loans and recordkeeping.

If a shareholder transfers money or property to a corporation in exchange for stock and, immediately afterwards, is in control of the corporation, the exchange is usually not taxable to the shareholder either, under the rules Publication 542 summarises and which section 351 sets out in the Code. There are exceptions, including transfers to an investment company. How those tests apply when bitcoin itself is contributed is discussed on the C corporation page. A cash contribution used to buy bitcoin is a simpler case, but it should still be recorded as equity, with the board authority and the bank evidence kept with the corporate records.

Source: IRS: Publication 542, Corporations (January 2024): capital contributions, below-market loans and recordkeeping, US Government Publishing Office (United States Code, 2024 edition): 26 U.S.C. 351: transfer to a corporation controlled by the transferor.

For a Delaware corporation, section 152 of the General Corporation Law says the board determines the consideration for stock, which may be cash, property or any benefit to the corporation, and that, in the absence of actual fraud, the directors' judgment as to the value of that consideration is conclusive. Section 161 allows the directors to issue, or take subscriptions for, additional shares up to the amount authorised in the certificate of incorporation, if those authorised shares have not already been issued, subscribed for or otherwise committed.

Source: Delaware Code: Title 8, section 152: issuance of stock, lawful consideration and fully paid stock, Delaware Code: Title 8, section 161: issuance of additional stock, when and by whom.

If the company is raising money from people who are not already shareholders, a share issue may be an offer of securities. The SEC's exempt offerings page, last reviewed or updated on 26 January 2026 and checked for this page on 10 November 2026, states that every offer and sale of securities must either be registered under the Securities Act of 1933 or rely on an available exemption. It lists the main exemptions, including Regulation D (Rules 506(b), 506(c) and 504), Regulation Crowdfunding, Regulation A and the intrastate rules. This page does not choose an exemption for you.

Source: US Securities and Exchange Commission: Exempt offerings: registration under the Securities Act of 1933, or an available exemption, for offers to outside investors.

For an S corporation, contributions and loans also affect the shareholder's basis, which can limit how much loss the shareholder may deduct. See shareholder basis for an S corporation. For an LLC, the starting point is how the LLC is classified for tax; a partnership has its own contribution rules. See bitcoin for a US LLC.

US: a shareholder loan

A shareholder can instead lend money to the corporation. That is a debt only if the facts support a debtor-creditor relationship rather than a second class of equity. Section 385 of the Internal Revenue Code authorises regulations on that line, and lists factors that may be taken into account, including: whether there is a written unconditional promise to pay on demand or on a specified date a sum certain, and to pay a fixed rate of interest; whether the interest is subordinated to, or has preference over, other indebtedness; the corporation's ratio of debt to equity; whether the interest is convertible into stock; and the relationship between holdings of stock and holdings of the interest in question. The issuer's own characterisation as stock or indebtedness is binding on the issuer and on the holders, but is not binding on the IRS.

Source: US Government Publishing Office (United States Code, 2024 edition): 26 U.S.C. 385: factors for treating an interest in a corporation as stock or indebtedness.

Those factors are why a board that intends a loan should say so in a written note or loan agreement, with an amount, an interest rate and a repayment date, and should then treat it as a loan in the books: a liability, not paid-in capital. If the advance is later treated as stock, amounts paid back to the shareholder can be treated as distributions rather than repayment of principal. Publication 542 also describes constructive distributions, including the cancellation of a shareholder's debt.

Source: IRS: Publication 542, Corporations (January 2024): capital contributions, below-market loans and recordkeeping.

Interest matters even if a note exists. Publication 542 says a below-market loan is a loan on which no interest is charged, or interest is charged below the applicable federal rate. It is generally treated as an arm's-length loan at that rate, plus an additional payment equal to the forgone interest. The borrower treats that additional payment as a gift, dividend, contribution to capital, payment of compensation, or other payment, depending on the substance of the transaction. If the corporation uses the proceeds in its trade or business, it may be able to deduct the forgone interest as well as interest it actually pays or accrues. Related-person rules can also defer a corporation's deduction for interest owed to a related cash-basis lender until the interest is paid and included in that person's income.

Source: IRS: Publication 542, Corporations (January 2024): capital contributions, below-market loans and recordkeeping.

Section 7872 of the Internal Revenue Code, of which Publication 542 is a summary, is the statutory source of those below-market rules. For a compensation-related loan or a corporation-shareholder loan, section 7872(c)(3) says the section does not apply on any day on which the aggregate outstanding amount of loans between the borrower and the lender does not exceed $10,000. That de minimis rule does not apply if one of the principal purposes of the interest arrangements is the avoidance of any Federal tax.

Source: US Government Publishing Office (United States Code, 2024 edition): 26 U.S.C. 7872: below-market loans, including the $10,000 de minimis rule in subsection (c)(3) and the tax-avoidance carve-out, IRS: Publication 542, Corporations (January 2024): capital contributions, below-market loans and recordkeeping.

For an S corporation, a loan that meets the straight debt safe harbour in Treasury Regulation 1.1361-1(l)(5) is not treated as a second class of stock. Straight debt, in that regulation, means a written unconditional obligation to pay a sum certain on demand or on a specified due date, which does not have an interest rate or payment dates contingent on profits, the borrower's discretion, dividends or similar factors, is not convertible into stock or other equity of the S corporation, and is held by an individual (other than a nonresident alien), an estate, or a trust described in section 1361(c)(2). Subordination does not by itself prevent the obligation from qualifying. See shareholder basis for an S corporation.

Source: eCFR: 26 CFR 1.1361-1(l)(5): S corporation straight debt safe harbour.

US: the board minute and the bookkeeping evidence

Publication 583 says that, except in a few cases, the law does not require any specific kind of records, but that a corporation should keep minutes of board of directors' meetings. The books should include a summary of transactions, ordinarily in journals and ledgers, supported by documents such as deposit slips, invoices, receipts and cancelled checks or equivalent account statements. Publication 542 says records that support items of income, deductions or credits must usually be kept for three years from the date the return is due or filed, whichever is later, and that records which verify basis in property should be kept for as long as they are needed to figure that basis. Keep copies of filed returns.

Source: IRS: Publication 583, Starting a Business and Keeping Records (December 2024): kinds of records, including board minutes, IRS: What kind of records should I keep? Supporting documents and electronic records, IRS: Publication 542, Corporations (January 2024): capital contributions, below-market loans and recordkeeping, IRS: How long should I keep records?.

On Form 1120, Schedule L (balance sheets per books) has separate lines for loans to shareholders (line 7), loans from shareholders (line 19), capital stock (line 22), additional paid-in capital (line 23) and retained earnings (lines 24 and 25). The 2025 instructions say a corporation with total receipts (page 1, line 1a plus lines 4 through 10) and total assets at the end of the tax year of less than $250,000 is not required to complete Schedules L, M-1 and M-2 if the Yes box on Schedule K, question 13, is checked. Whether or not Schedule L is filed, the books should still distinguish a shareholder loan from paid-in capital.

Source: IRS: Instructions for Form 1120 (2025): Schedule L lines and the $250,000 receipts and assets threshold, IRS: Form 1120, U.S. Corporation Income Tax Return (2025): Schedule L, including loans to and from shareholders, capital stock, additional paid-in capital and retained earnings.

In practice, keep together:

• The board minute or written consent approving the purchase and naming the funding source, with any conflict disclosure.
• For retained earnings: the cash position used in the paper, and bank records for each payment to the provider.
• For a capital contribution: the board authority, any stock record or ledger entry, and evidence of the funds arriving in a company account.
• For a shareholder loan: the signed note or loan agreement, the interest terms, and the bank evidence of the advance and of any repayments.
• The usual purchase pack, as on banking and source of funds, which also supports basis in the bitcoin acquired.

Common questions

Does buying bitcoin out of retained profits create a tax bill?

Not by itself, in either country, on the sources checked for this page. Tax usually arises when the company later disposes of the bitcoin. In the US, fair value accounting can still change reported profit or loss at a period end without a sale. Ask your accountant how your framework applies.

If a director pays for the bitcoin personally, is that a loan to the company?

It can be, if that is what the parties intend and the books record it that way, but it is a poor starting point. Pay from a company account. If a personal payment has already happened, record it promptly on the loan account or as a contribution, with a minute, so the direction of the balance is clear. An unrecorded personal payment is how UK loan accounts become overdrawn, and how US advances become hard to classify.

Can the company borrow from a bank instead?

This page covers funding from the owners and from retained profits. A bank or other third-party loan is a different contract, with its own terms, covenants and banking due diligence. See banking and source of funds and borrowing against bitcoin if the loan would be secured on the holding.

Does s455 apply when a director lends to the company?

No. Section 455 applies when a close company lends to a participator, not the other way around. The director's loan account is in credit when the company is the borrower.

Is an informal shareholder advance a loan or a contribution in the US?

That depends on the facts, including the written terms, interest, repayment date and how the parties treat it. Section 385 lists factors; the company's own label is not binding on the IRS. A written note and consistent bookkeeping are the usual way to support a loan.

Common mistakes

• Treating a director lending to the company as if it were the s455 situation, or the reverse: leaving a loan account overdrawn and assuming it is harmless because the company later bought bitcoin.
• Paying from a personal account, or mixing personal and company money, so the loan account and the bank trail no longer match.
• Calling a payment "new capital" without allotting shares or filing a return of allotment, or buying someone else's existing shares and thinking the company has been funded.
• Calling a US shareholder advance a loan without a written promise to repay, interest or a date, or recording it as equity in the books while describing it as debt, or the other way around.
• An interest-free related-party loan in the US, without considering the below-market loan rules, or assuming a loan of $10,000 or less is automatically outside section 7872 without looking at the tax-avoidance carve-out.
• Using EIS or SEIS subscription money for a bitcoin treasury holding without checking the use-of-money rules.
• Deducting CT61 tax from every payment of interest to a director, including short interest, or missing the 14-day CT61 deadline where yearly interest is paid.
• No board minute, or a minute that approves a purchase but is silent on how it is funded.
• Keeping the minute and the recovery material together. The minute belongs with the company records. Recovery words do not.

Read next

• Buying bitcoin as a company, providers, checks, banks and the test transaction.
• Board paper outline, the paper and the minute before the decision.
• Banking and source of funds, the pack banks ask for.
• Directors' duties and bitcoin, UK duties and Delaware as a US example.
• Bookkeeping examples, the transaction log after the money has moved.
• Company tax on bitcoin, tax when the company later disposes of bitcoin.
• UK limited companies and US C corporations, for entity-specific rules.
• Treasury policy, write the funding and approval rules down first.

Sources

Primary sources only. Each link was checked on 10 November 2026. Rules change, so confirm the current version with your adviser.

1. HMRCCRYPTO41200: Corporation Tax on chargeable gains, introduction
2. GOV.UKRunning a limited company: company and accounting records
3. legislation.gov.ukCompanies Act 2006, section 172: duty to promote the success of the company
4. HMRCCG50285: subscription for new shares, where the proceeds go to the company, versus a purchase of existing shares
5. HMRCCFM11020: raising finance by issuing shares, and the power to allot under the Companies Act 2006
6. legislation.gov.ukCompanies Act 2006, section 555: return of allotment of shares, to be delivered within one month
7. Companies HouseReturn of allotment of shares (SH01), the form used to give notice of shares allotted after incorporation
8. legislation.gov.ukCompanies Act 2006, section 561: existing shareholders' right of pre-emption
9. legislation.gov.ukCompanies Act 2006, section 569: disapplication of pre-emption rights for a private company with only one class of shares
10. legislation.gov.ukIncome Tax Act 2007, section 175: EIS use of the money raised requirement, including the two-year limit
11. GOV.UKApply to use the Enterprise Investment Scheme: what you can do with money raised, including spending within two years
12. legislation.gov.ukIncome Tax Act 2007, section 257CC: SEIS spending of the money raised requirement
13. legislation.gov.ukIncome Tax Act 2007, section 257AC: SEIS meaning of period A and period B, ending the day before the third anniversary of issue
14. GOV.UKApply to use the Seed Enterprise Investment Scheme: money raised must be spent within three years of the share issue
15. GOV.UKDirector's loans: overview, including the director's loan account and credit or overdrawn balances
16. GOV.UK (The Insolvency Service)Director information hub: loans and funding, including recording a loan to the company on the director's loan account
17. HMRCNIM12016: director's loan accounts, credit and debit balances, and what the account records
18. GOV.UKDirector's loans: if you lend your company money, Corporation Tax, interest and form CT61
19. legislation.gov.ukIncome Tax Act 2007, section 874: duty to deduct a sum representing income tax from certain payments of yearly interest
20. HMRCSAIM9070: deduction of tax from yearly interest, including that the duty applies only to yearly interest
21. HMRCSAIM9075: case law on short and yearly interest, including the parties' intention
22. HMRCCTM35110: CT61 return periods and the 14-day filing deadline
23. HMRCCTM35120: Income Tax on a CT61 payment is due within 14 days of the end of the return period
24. legislation.gov.ukCorporation Tax Act 2009, section 373: late interest treated as not accruing until paid in some cases
25. legislation.gov.ukCorporation Tax Act 2009, section 375: late interest, loans to close companies by participators
26. HMRCCTM61505: close companies, loans to participators, the s455 charge and the rate
27. legislation.gov.ukCorporation Tax Act 2010, section 455: charge to tax in case of loan to participator
28. legislation.gov.ukFinance Act 2026, section 4: dividend ordinary and upper rates for 2026-27, including 35.75%
29. GOV.UKDirector's loans: if you owe your company money, including form CT600A and benefit in kind rules
30. legislation.gov.ukCompanies Act 2006, section 197: loans to directors, requirement of members' approval
31. legislation.gov.ukCompanies Act 2006, section 207: exception for minor and business transactions, including the £10,000 loan threshold
32. legislation.gov.ukCompanies Act 2006, section 413: notes to the accounts, information about directors' benefits, advances, credit and guarantees
33. legislation.gov.ukCompanies Act 2006, section 248: minutes of directors' meetings
34. IRSNotice 2014-21: virtual currency is treated as property for federal tax purposes
35. IRSPublication 542, Corporations (January 2024): capital contributions, below-market loans and recordkeeping
36. US Government Publishing Office (United States Code, 2024 edition)26 U.S.C. 351: transfer to a corporation controlled by the transferor
37. Delaware CodeTitle 8, section 152: issuance of stock, lawful consideration and fully paid stock
38. Delaware CodeTitle 8, section 161: issuance of additional stock, when and by whom
39. US Securities and Exchange CommissionExempt offerings: registration under the Securities Act of 1933, or an available exemption, for offers to outside investors
40. US Government Publishing Office (United States Code, 2024 edition)26 U.S.C. 385: factors for treating an interest in a corporation as stock or indebtedness
41. US Government Publishing Office (United States Code, 2024 edition)26 U.S.C. 7872: below-market loans, including the $10,000 de minimis rule in subsection (c)(3) and the tax-avoidance carve-out
42. eCFR26 CFR 1.1361-1(l)(5): S corporation straight debt safe harbour
43. IRSPublication 583, Starting a Business and Keeping Records (December 2024): kinds of records, including board minutes
44. IRSWhat kind of records should I keep? Supporting documents and electronic records
45. IRSHow long should I keep records?
46. IRSInstructions for Form 1120 (2025): Schedule L lines and the $250,000 receipts and assets threshold
47. IRSForm 1120, U.S. Corporation Income Tax Return (2025): Schedule L, including loans to and from shareholders, capital stock, additional paid-in capital and retained earnings