Guides / Glossary / UTXO
Glossary

UTXO: the coins a company actually holds

Unspent transaction output: a spendable amount of bitcoin recorded on chain. A wallet balance is the sum of its UTXOs.

Education onlyUnited Kingdom and United States

Definition. Unspent transaction output: a spendable amount of bitcoin recorded on chain. A wallet balance is the sum of its UTXOs.

How it works

Bitcoin does not keep account balances. Every payment creates outputs, each locking a specific amount to a script, and those outputs stay unspent until a later transaction uses them as inputs. Each unspent output is a UTXO. A company wallet that received five payments holds five UTXOs, and its balance is their total. When it pays someone, the wallet picks UTXOs to spend, sends the amount due, and returns the rest to itself as a new change output.

Why it matters for a company

UTXOs affect fees. Every input adds to the size of a transaction, and fees are paid per unit of size. A wallet with many small UTXOs pays more to spend the same total than a wallet with a few large ones. That is why some companies consolidate small UTXOs when fees are low.

They also affect privacy. Spending several UTXOs together tells anyone watching the chain that they probably belong to the same owner. Coin selection, the wallet's choice of which UTXOs to spend, is a trade off between fees, privacy and keeping change tidy.

Tax treats UTXOs differently in each country.

United KingdomGo to United States

For Corporation Tax, HMRC's Cryptoassets Manual says tokens of the same type are usually pooled, subject to same day and ten day rules for companies. The cost of an individual UTXO is not normally what matters; the pooled cost of all the company's bitcoin is.

Under Revenue Procedure 2024-28, from 1 January 2025 basis is tracked wallet by wallet or account by account. A company can use specific identification if it keeps adequate records, so records linking UTXOs or units to their purchase lots can affect the gain on each disposal.

Both countries
Example only, fictional. A company bought bitcoin in twelve monthly purchases, each landing as a separate UTXO. Its first supplier payment spends three of them, and the change returns as a thirteenth UTXO. The bookkeeper records the fee and the disposal under the country's rules.

Common mistakes

Sources

Primary sources only. Each link was checked on 9 November 2026. Rules change, so confirm the current version with your adviser.

  1. Bitcoin developer documentationGlossary: one bitcoin equals 100,000,000 satoshis
  2. Bitcoin developer documentationTransactions guide: public keys, private keys and signatures
  3. Bitcoin OptechTopic: coin selection
  4. HMRCCRYPTO41350: Corporation Tax on chargeable gains, pooling and the same day and ten day rules
  5. IRSRevenue Procedure 2024-28: allocating unused basis to wallets and accounts (PDF)
Education, not advice.

This is general information and education only. It is not financial, investment, tax, accounting, legal or regulatory advice, and it is not a recommendation to buy, sell or hold bitcoin or any other asset. It does not take account of your circumstances or those of your company. You must obtain your own official professional advice to confirm this information is correct before acting on it.

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