Last checked 1 November 2026. Making Tax Digital is being introduced in stages. The dates and thresholds below are from GOV.UK on the date shown. HMRC may write to you, but it is your responsibility to check whether and when you need to sign up. If anything here conflicts with the linked source, the source wins.
Making Tax Digital (MTD) is HMRC's programme for keeping business records digitally and sending updates using compatible software. It matters for a business that holds bitcoin in two ways: which records must be digital, and whether bitcoin gains are part of the quarterly updates. This is a UK only topic. For US record keeping, see the bookkeeping examples.
The short version
- A limited company is not in MTD for Income Tax. It may be in MTD for VAT if it is VAT registered.
- Sole traders and landlords come into MTD for Income Tax from April 2026 in stages, based on qualifying income.
- Qualifying income is income from self employment and property. On our reading, capital gains on bitcoin held as an investment are not part of it. Check with your adviser.
- Whatever MTD requires, keep a full bitcoin transaction log. HMRC expects records of every transaction.
MTD for Income Tax: who and when
| From | You need to use MTD for Income Tax if your qualifying income is over | Based on the tax year |
|---|---|---|
| 6 April 2026 | £50,000 | 2024 to 2025 |
| 6 April 2027 | £30,000 | 2025 to 2026 |
| 6 April 2028 | £20,000 | 2026 to 2027 |
GOV.UK says qualifying income is your total income from self employment and property before expenses. Other income, such as employment income, is not counted for the threshold. You need to be registered for Self Assessment, and GOV.UK says partnerships will need to use MTD for Income Tax in the future, with the timeline to be set out later.
Source: GOV.UK: Find out if and when you need to use Making Tax Digital for Income Tax, GOV.UK: Work out your qualifying income for Making Tax Digital for Income Tax, GOV.UK: Making Tax Digital for Income Tax: collection.
Where bitcoin fits
| Situation | MTD position, on our reading | Check |
|---|---|---|
| Sole trader holds bitcoin as an investment and sells it | Gains are Capital Gains Tax, not self employment income, so they are reported on the Self Assessment return, not in quarterly updates. | Check with your adviser. |
| Sole trader is paid in bitcoin for goods or services | The sterling value is business income at the time of receipt, so it is part of the self employment records and quarterly updates. | Use a consistent valuation method and record it. |
| Sole trader is trading in bitcoin as the business | HMRC says this is exceptional. If it applied, profits would be trading income. | Ask your adviser before assuming this. |
| Limited company holds bitcoin | Outside MTD for Income Tax. Corporation Tax rules apply. | See company tax. |
Source: HMRC: CRYPTO22100: cryptoassets for individuals, what is a disposal, HMRC: CRYPTO40150: Is the business trading in cryptoassets?.
MTD for VAT
GOV.UK says all VAT registered businesses must follow the MTD rules for VAT, keeping digital records and filing returns through compatible software. HMRC's guidance, which it describes as provisional, is that exchange tokens such as bitcoin are not themselves charged to VAT when used to pay for goods or services, while VAT is due in the normal way on the goods or services sold. See our page on accepting bitcoin payments.
Source: GOV.UK: Charge, reclaim and record VAT: keeping VAT records (Making Tax Digital for VAT), GOV.UK: Making Tax Digital for VAT: collection (records and returns through compatible software), HMRC: CRYPTO45000: VAT and cryptoassets (HMRC calls its view provisional).
Records to keep in any case
HMRC expects businesses to keep records of each cryptoasset transaction, converted to sterling. Keep the date, the type, the amount, the sterling value and how it was worked out, the fees, the counterparty or exchange, and wallet or account references.
Source: HMRC: CRYPTO40100: Conversion to sterling and accountancy.
Our judgement, not a rule: even where bitcoin gains sit outside the quarterly updates, it is easier to keep the bitcoin log in the same place and on the same schedule as the MTD records, so nothing is missed at the year end.
Read next
- Bitcoin by business type: sole traders, partners and companies.
- Bookkeeping examples: the transaction log.
- Company tax on bitcoin: Corporation Tax for companies.
Sources
Primary sources only. Each link was checked on 1 November 2026. Rules change, so confirm the current version with your adviser.
- GOV.UKFind out if and when you need to use Making Tax Digital for Income Tax
- GOV.UKWork out your qualifying income for Making Tax Digital for Income Tax
- GOV.UKMaking Tax Digital for Income Tax: collection
- HMRCCRYPTO22100: cryptoassets for individuals, what is a disposal
- HMRCCRYPTO40150: Is the business trading in cryptoassets?
- GOV.UKCharge, reclaim and record VAT: keeping VAT records (Making Tax Digital for VAT)
- GOV.UKMaking Tax Digital for VAT: collection (records and returns through compatible software)
- HMRCCRYPTO45000: VAT and cryptoassets (HMRC calls its view provisional)
- HMRCCRYPTO40100: Conversion to sterling and accountancy
One email. The whole library.
Policy checklist, board paper, recovery drill record, document pack and the rest, in one send. Then one short Thursday lesson for small companies in the UK and the US.
Free. One email with the whole template library, then one short lesson each Thursday. Unsubscribe at any time. See our privacy notice.
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.
Rules change. This information is correct to our understanding at the last-reviewed date, but it may be incomplete or out of date, and official sources take precedence. Bitcoin is volatile. A company that buys it could lose some or all of the money it puts in.
Using this site does not create an adviser or client relationship. IoT Financial is not authorised or regulated by the Financial Conduct Authority (FCA) and is not registered with the US Securities and Exchange Commission (SEC) as an investment adviser. Read the full disclaimer.