Sources checked 10 November 2026. This page is education for companies where an insider might buy bitcoin from the company, sell bitcoin to it, or deal with it in some other way. It is not legal, tax or accounting advice and it is not a recommendation to buy, sell or hold bitcoin. Approval rules and tax treatment depend on the company's constitution, ownership and facts. Confirm the position with your lawyer and accountant before the transaction. If anything here conflicts with a linked source, the source wins.
Short answer
When the person on the other side of a bitcoin trade is a director, a shareholder, a relative of one, or another company they control, the trade is a related-party transaction. Company law asks for the interest to be declared and, above set sizes, for approval by the shareholders or by disinterested directors. Tax law often replaces the agreed price with market value, restricts losses, and can treat any undervalue or overvalue as a distribution. The practical answer is the same in both countries: declare the interest first, get the right approval, use a documented market price at a recorded time, and minute it.
Where this comes up
| Situation | Why it is related party | Read also |
|---|---|---|
| A director or owner sells bitcoin they hold personally to the company. | The seller is an insider and sets, or influences, the price. | Funding a purchase |
| The company sells bitcoin to a director or shareholder, or lets them buy at the company's cost. | Value may pass from the company to the insider. | Selling or rebalancing |
| Bitcoin moves between two companies with the same owner. | Both companies are under common control. | Group structures |
| Salary, bonuses or fees are paid in bitcoin to a director. | The recipient is an insider and the value has to be set. | Paying staff and suppliers |
| A director lends bitcoin to the company, or the company lends to a director. | A loan between the company and an insider, with its own rules. | Borrowing against bitcoin |
| A firm owned by a director provides custody, signing or advisory services. | The director has an interest in the supplier. | Custodian due diligence |
Choose your country for the rules that apply.
The short version: UK
- A director interested in a proposed transaction must declare the nature and extent of the interest to the other directors before the company enters into it.
- If a director, a director of the holding company, or a person connected with them, buys a substantial non-cash asset from the company or sells one to it, the shareholders must approve it by resolution first. Bitcoin is a non-cash asset.
- Substantial means more than £100,000, or more than 10% of the company's net assets and more than £5,000. A series of trades is added together.
- For chargeable gains, a transaction between connected persons is treated as not at arm's length, so market value is used. A loss on a disposal to a connected person can only be set against gains on other disposals to that same person.
- If a company transfers bitcoin to a shareholder for less than market value, or takes it from a shareholder for more, the difference can be treated as a distribution.
UK: declare the interest first
Section 177 of the Companies Act 2006 says that if a director is in any way, directly or indirectly, interested in a proposed transaction or arrangement with the company, the director must declare the nature and extent of that interest to the other directors, at a meeting or by written or general notice, and before the company enters into the transaction. A further declaration is needed if the first one becomes inaccurate. In a company with one director, the board minute is still the place to record what was decided and on what terms. The company's articles may add their own rules on whether an interested director can vote.
UK: substantial property transactions
Section 190 says a company may not enter into an arrangement under which a director of the company or of its holding company, or a person connected with such a director, acquires a substantial non-cash asset from the company, or the company acquires one from them, unless the arrangement has been approved by a resolution of the members or is conditional on that approval. Where the director is a director of the holding company, the holding company's members must approve too. Approval is not needed from the members of a wholly-owned subsidiary.
Under section 191, an asset is substantial if its value exceeds 10% of the company's asset value and is more than £5,000, or exceeds £100,000. Asset value means net assets in the most recent statutory accounts or, if none have been prepared, called-up share capital. The test is applied when the arrangement is entered into. Section 190(5) treats an arrangement that is one of a series involving non-cash assets as if it involved one asset worth the total, so a run of small purchases from a director can cross the line together.
Source: legislation.gov.uk: Companies Act 2006, section 191: meaning of substantial, 10% of asset value and more than £5,000, or more than £100,000, legislation.gov.uk: Companies Act 2006, section 190: substantial property transactions, requirement of members' approval.
If approval was needed and not obtained, section 195 makes the arrangement voidable at the company's option in most cases, and the director and connected person, among others, can be liable to account for any gain and to indemnify the company for any loss. Section 252 defines connected persons, including members of the director's family and companies the director is connected with.
Source: legislation.gov.uk: Companies Act 2006, section 195: civil consequences of a substantial property transaction without approval, legislation.gov.uk: Companies Act 2006, section 252: persons connected with a director.
UK: market value and connected persons
Section 286 of the Taxation of Chargeable Gains Act 1992 defines connected persons. HMRC's summary lists relatives, trustees, partners and companies; a company is connected with a person who controls it, alone or with persons connected with them, and two or more people acting together to secure or exercise control of a company are connected with one another. Relatives here means siblings, ancestors and lineal descendants, with spouses and civil partners. Aunts, uncles, nieces and nephews are not included.
Source: legislation.gov.uk: Taxation of Chargeable Gains Act 1992, section 286: connected persons, including a company and the person who controls it, HMRC: CG14580: connected persons, relatives, trustees, partners and companies.
Section 18 then treats a transaction between connected persons as otherwise than by way of a bargain at arm's length, and section 17 deems such a disposal and acquisition to be at market value. HMRC's manual says the same market value figure is used as the acquirer's cost. So when a controlling director sells bitcoin to their company, the director's disposal and the company's acquisition cost are both measured at market value, whatever price was written down. The director's own disposal follows the rules for individuals, not the company rules.
Source: legislation.gov.uk: Taxation of Chargeable Gains Act 1992, section 18: transactions between connected persons, legislation.gov.uk: Taxation of Chargeable Gains Act 1992, section 17: disposals and acquisitions treated as made at market value, HMRC: CG14530: consideration for disposal, the market value rule.
Losses are restricted. Under section 18(3), a loss on a disposal to a connected person can be deducted only from a chargeable gain on another disposal to that same person while they are still connected. HMRC calls this a clogged loss. Selling bitcoin at a loss to the owner's other company does not give a loss the first company can use freely.
Source: legislation.gov.uk: Taxation of Chargeable Gains Act 1992, section 18: transactions between connected persons, HMRC: CG14561: transactions between connected persons, clogged losses.
UK: undervalues and overvalues
Section 1020 of the Corporation Tax Act 2010 applies to a transfer of assets by a company to its members, or to a company by its members, where the benefit the member receives exceeds the new consideration the member gives. The company is treated as making a distribution of the excess, valued at market value. In plain terms, selling bitcoin to a shareholder below market value, or buying it from a shareholder above market value, can create a distribution for tax. Our judgement, not a rule: if the insider is a director or employee but not a shareholder, the difference may instead be earnings. Ask the accountant before agreeing a price that is not market value.
Record the value used. HMRC expects a business to convert cryptoasset values to sterling on a reasonable, consistent basis and keep a record of the method. For a related-party trade, a timestamped price from a named source, saved with the minute, is the simplest evidence. If the company holds pooled bitcoin, the sale to the insider is a normal disposal from the pool. See company tax on bitcoin.
Source: HMRC: CRYPTO40100: Conversion to sterling and accountancy, HMRC: CRYPTO41250: Corporation Tax on chargeable gains, what counts as a disposal.
In the accounts, section 413 requires advances and credits to directors to be disclosed, and FRS 102 has its own related party disclosure requirements, with a narrower set for small entities. Ask the accountant what the notes must say for the company's framework. See UK accounting under FRS 102.
Source: legislation.gov.uk: Companies Act 2006, section 413: notes to the accounts, information about directors' benefits, advances, credit and guarantees, FRC: FRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland.
The short version: US
- State corporate law sets the approval route. In Delaware, section 144 protects interested director and officer transactions that are approved after full disclosure by disinterested directors, or by disinterested stockholders, or that are fair to the corporation.
- A loss on selling property to a related person is not deductible. That includes an individual and a corporation more than 50% owned by them, and two corporations in the same controlled group.
- A corporation that sells property to a non-corporate shareholder below fair market value may be treated as making a distribution of the difference.
- A corporation that distributes appreciated bitcoin recognises gain as if it had sold it at fair market value.
- The IRS can reallocate income and deductions between businesses under common control to reflect income clearly.
US: approval by disinterested directors or stockholders
Corporate approval rules come from the state of incorporation and the company's own documents. Delaware is used here as a common example. The current text of section 144 of the Delaware General Corporation Law says a transaction between the corporation, or a subsidiary, and one or more of its directors or officers, or an entity in which they have an interest, cannot give rise to equitable relief or damages against a director or officer for that reason if one of three routes is met. The material facts are disclosed or known to the board or committee, and it authorises the transaction in good faith by a majority of the disinterested directors (with a committee of two or more disinterested directors if most of the board is not disinterested); or the transaction is approved or ratified by an informed, uncoerced vote of a majority of the votes cast by disinterested stockholders; or the transaction is fair to the corporation and its stockholders. Controlling stockholder transactions have separate conditions in the same section.
Our judgement, not a rule: a small corporation with one or two directors who are also the only stockholders often cannot find a disinterested director. The fairness route then depends on evidence that the price and terms were fair, which is another reason to use a documented market price. Other states, LLC operating agreements and partnership agreements have their own rules.
US: losses between related persons
Section 267(a)(1) of the Internal Revenue Code disallows any deduction for a loss from the sale or exchange of property, directly or indirectly, between related persons listed in section 267(b). The list includes an individual and a corporation more than 50% in value of whose stock they own directly or indirectly, and two corporations that are members of the same controlled group. If the buyer later sells the property at a gain, section 267(d) lets the buyer reduce that gain by the loss the seller was denied. For a partnership, including an LLC taxed as one, section 707(b) disallows losses on sales between the partnership and a person owning more than 50% of its capital or profits interest.
Source: US Government Publishing Office (United States Code, 2024 edition): 26 U.S.C. 267: losses, expenses and interest with respect to transactions between related taxpayers, US Government Publishing Office (United States Code, 2024 edition): 26 U.S.C. 707: transactions between a partner and a partnership, including losses with a more than 50% partner.
Bitcoin is property for federal tax, so these rules apply to it as to any other asset. Selling the company's bitcoin at a loss to the controlling shareholder to realise the loss in the company does not work as a deduction.
Source: IRS: Notice 2014-21: virtual currency is treated as property for federal tax purposes, US Government Publishing Office (United States Code, 2024 edition): 26 U.S.C. 267: losses, expenses and interest with respect to transactions between related taxpayers.
US: bargain sales, distributions and allocations
Publication 542 says a sale or exchange of property by a corporation to a shareholder may be treated as a distribution: for a shareholder who is not a corporation, if the fair market value of the property on the date of the sale exceeds the price paid, the excess is treated as a distribution. It lists excessive rents and salaries paid to shareholders as other examples of constructive distributions. Section 311(b) separately says a corporation that distributes appreciated property to a shareholder recognises gain as if it had sold the property at fair market value. Distributing bitcoin to an owner, or selling it to them cheaply, can therefore bring the corporation's gain into tax.
Source: IRS: Publication 542, Corporations: constructive distributions, including transfers of property to shareholders for less than FMV, US Government Publishing Office (United States Code, 2024 edition): 26 U.S.C. 311: taxability of a corporation on distributions, including appreciated property.
Section 482 allows the IRS to distribute, apportion or allocate gross income, deductions, credits or allowances between two or more organisations, trades or businesses owned or controlled by the same interests, if needed to prevent evasion of taxes or to clearly reflect income. Moving bitcoin between commonly owned businesses at a price that is not fair market value is the kind of transaction it reaches. Within a consolidated group, intercompany transactions have their own regulations; see consolidated returns.
Keep the fair market value evidence with the corporate records: the source, the time and the units, plus the board or stockholder approval. Basis records for the bitcoin acquired support the next sale. See the purchase pack and Form 1099-DA; a private trade with an insider produces no broker form, so the company's own records are the only record.
Source: IRS: How long should I keep records?.
Before any related-party bitcoin trade
- Ask whether the trade needs to be with the insider at all. Buying or selling through a regulated provider avoids most of the issues on this page.
- Declare the interest, in writing, before the board decides.
- Check the size against the company law threshold or approval route, and get the members' or disinterested approval first where it is needed.
- Agree the price by reference to a named market price source at a stated time, and the amount in bitcoin and in pounds or dollars.
- Send a small test amount first, and record the receiving address shown on the company's own signing device. See sending bitcoin safely.
- Minute the decision, the approval, the price evidence and the transaction ID. Keep the insider's own records separate from the company's.
- Tell the accountant before the year end so the tax and disclosure treatment is settled.
Common questions
Can the owner just transfer their own bitcoin into the company?
They can, but it is a disposal by the owner and an acquisition by the company, usually at market value in the UK, and in the US either a sale, a contribution to capital or an exchange for shares. Each has different tax and company law consequences. Decide which it is, and document it, before the coins move. See funding a company bitcoin purchase and the C corporation page.
Does section 190 apply to every director purchase?
No. Only to substantial non-cash assets as section 191 defines them, counting a series together, and not to members of a wholly-owned subsidiary.
Is the market value rule only a UK idea?
No. The US uses fair market value for distributions, bargain sales and the related-party rules, and the IRS can reallocate under section 482. The details differ.
Common mistakes
- Buying a director's bitcoin at their own quoted price, with no market price evidence.
- Splitting a large purchase from a director into smaller ones and assuming each is below the section 191 threshold.
- Selling at a loss to the owner's other company and claiming the loss.
- Letting a director buy the company's bitcoin at its original cost.
- No written declaration of interest, or an approval given after the trade.
- The insider and the company using the same wallet or signing devices, so it is unclear whose bitcoin moved.
Read next
- Directors' duties and bitcoin, the duties behind the approval rules.
- Group and holding company structures, transfers between companies with the same owner.
- Funding a company bitcoin purchase, loans and share capital from insiders.
- Paying staff and suppliers in bitcoin, pay and fees in bitcoin.
- Board paper outline, the paper and the minute.
- Company tax on bitcoin, UK Corporation Tax and US federal tax.
Sources
Primary sources only. Each link was checked on 10 November 2026. Rules change, so confirm the current version with your adviser.
- legislation.gov.ukCompanies Act 2006, section 177: duty to declare an interest in a proposed transaction or arrangement
- legislation.gov.ukCompanies Act 2006, section 190: substantial property transactions, requirement of members' approval
- legislation.gov.ukCompanies Act 2006, section 191: meaning of substantial, 10% of asset value and more than £5,000, or more than £100,000
- legislation.gov.ukCompanies Act 2006, section 195: civil consequences of a substantial property transaction without approval
- legislation.gov.ukCompanies Act 2006, section 252: persons connected with a director
- legislation.gov.ukTaxation of Chargeable Gains Act 1992, section 286: connected persons, including a company and the person who controls it
- HMRCCG14580: connected persons, relatives, trustees, partners and companies
- legislation.gov.ukTaxation of Chargeable Gains Act 1992, section 18: transactions between connected persons
- legislation.gov.ukTaxation of Chargeable Gains Act 1992, section 17: disposals and acquisitions treated as made at market value
- HMRCCG14530: consideration for disposal, the market value rule
- HMRCCG14561: transactions between connected persons, clogged losses
- legislation.gov.ukCorporation Tax Act 2010, section 1020: transfers of assets between a company and its members treated as distributions
- HMRCCRYPTO40100: Conversion to sterling and accountancy
- HMRCCRYPTO41250: Corporation Tax on chargeable gains, what counts as a disposal
- legislation.gov.ukCompanies Act 2006, section 413: notes to the accounts, information about directors' benefits, advances, credit and guarantees
- FRCFRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland
- Delaware CodeTitle 8, section 144: interested directors and officers, controlling stockholder transactions
- US Government Publishing Office (United States Code, 2024 edition)26 U.S.C. 267: losses, expenses and interest with respect to transactions between related taxpayers
- US Government Publishing Office (United States Code, 2024 edition)26 U.S.C. 707: transactions between a partner and a partnership, including losses with a more than 50% partner
- IRSNotice 2014-21: virtual currency is treated as property for federal tax purposes
- IRSPublication 542, Corporations: constructive distributions, including transfers of property to shareholders for less than FMV
- US Government Publishing Office (United States Code, 2024 edition)26 U.S.C. 311: taxability of a corporation on distributions, including appreciated property
- US Government Publishing Office (United States Code, 2024 edition)26 U.S.C. 482: allocation of income and deductions among taxpayers under common control
- IRSHow long should I keep records?
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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.
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