Paying staff and suppliers in bitcoin

Last checked 1 November 2026. Payroll rules are detailed and change often. Your payroll provider and accountant should confirm how they apply before the first payment. If anything here conflicts with the linked source, the source wins.

Paying people in bitcoin is allowed in both countries, but it does not remove the payroll rules. Each payment is valued in sterling or dollars, taxed like ordinary pay, and is also a disposal of bitcoin by the company. This page sets out the official position for staff and for suppliers.

UK: staff pay

HMRC considers exchange tokens to be money's worth, and so employment income subject to Income Tax and National Insurance on the value of the asset. It says exchange tokens will generally be readily convertible assets. Where pay is given as a readily convertible asset, the employer must value it using its best estimate, apply PAYE Income Tax and Class 1 National Insurance, and report and pay through real time information. If the tax cannot be recovered from the employee's other pay, the employer must still pay it, and if the employee does not make it good within 90 days of the end of the tax year, a further tax and National Insurance charge arises.

Source: HMRC: CRYPTO42050: paying employees in cryptoassets (money's worth), HMRC: CRYPTO42100: exchange tokens as readily convertible assets, PAYE and the 90 day make good rule, HMRC: CRYPTO21100: employment earnings paid in cryptoassets.

UK: the minimum wage

Regulation 10 of the National Minimum Wage Regulations 2015 lists payments and benefits that do not count towards minimum wage pay, including benefits in kind other than living accommodation.

Source: legislation.gov.uk: National Minimum Wage Regulations 2015, regulation 10: payments and benefits in kind that do not count.

Our judgement, not a rule: whether pay in bitcoin counts towards the minimum wage is not settled in the sources above. The cautious approach is to pay at least the minimum wage in sterling and treat any bitcoin as extra.

UK: suppliers and VAT

Paying a supplier in bitcoin is a disposal by the company, so a gain or loss arises against the value of what it buys. HMRC's VAT guidance on cryptoassets, which it describes as provisional, covers the supplier's side.

Source: HMRC: CRYPTO41250: Corporation Tax on chargeable gains, what counts as a disposal, HMRC: CRYPTO45000: VAT and cryptoassets (HMRC calls its view provisional).

US: employees

The IRS says the form in which pay is made does not change whether it is wages. In its words, "the fair market value of virtual currency paid as wages, measured in U.S. dollars at the date of receipt, is subject to federal income tax withholding", as well as FICA and FUTA tax, and must be reported on Form W-2.

Source: IRS: Frequently asked questions on virtual currency transactions.

For minimum wage and overtime, the Department of Labor regulation at 29 CFR 531.27 says the Fair Labor Standards Act requires wages to be paid in cash or a negotiable instrument payable at par, with limited exceptions for board, lodging and other facilities.

Source: eCFR: 29 CFR 531.27: wages must be paid in cash or negotiable instrument payable at par.

Our judgement, not a rule: in practice that means paying at least the required minimum and overtime in dollars. State wage laws may add their own rules.

US: contractors and suppliers

The IRS says virtual currency received by an independent contractor is self employment income at its dollar value on receipt. A company that pays for services with bitcoin it holds as a capital asset has a gain or loss: the fair market value of the services less its basis in the bitcoin. Payments to contractors may need a Form 1099-NEC; the IRS instructions raise the reporting threshold to $2,000 for payments made after 2025.

Source: IRS: Frequently asked questions on virtual currency transactions, IRS: Instructions for Forms 1099-MISC and 1099-NEC (threshold change for tax years after 2025).

A payment routine

• Agree the pay or invoice amount in sterling or dollars first, then the bitcoin amount at a recorded rate and time.
• Get the receiving address in writing and confirm it by a second route, as on our page on sending bitcoin safely.
• Record the value, the transaction ID and the fee in the transaction log.
• Run it through payroll or accounts payable as normal, with the bitcoin as the method of payment.

Read next

• Sending bitcoin safely, address checks and test payments.
• Bookkeeping examples, recording each payment.
• Taking bitcoin as payment, the other direction.

Sources

Primary sources only. Each link was checked on 1 November 2026. Rules change, so confirm the current version with your adviser.

1. HMRCCRYPTO42050: paying employees in cryptoassets (money's worth)
2. HMRCCRYPTO42100: exchange tokens as readily convertible assets, PAYE and the 90 day make good rule
3. HMRCCRYPTO21100: employment earnings paid in cryptoassets
4. legislation.gov.ukNational Minimum Wage Regulations 2015, regulation 10: payments and benefits in kind that do not count
5. HMRCCRYPTO41250: Corporation Tax on chargeable gains, what counts as a disposal
6. HMRCCRYPTO45000: VAT and cryptoassets (HMRC calls its view provisional)
7. IRSFrequently asked questions on virtual currency transactions
8. eCFR29 CFR 531.27: wages must be paid in cash or negotiable instrument payable at par
9. IRSInstructions for Forms 1099-MISC and 1099-NEC (threshold change for tax years after 2025)