Paying with crypto is a disposal: every payment, every time

In the US and UK, spending crypto on goods or services is a taxable disposal. There is no small-payment exemption yet, so records matter.

2026-10-17 · 6 min read

If your company pays a vendor, a contractor or a subscription in crypto, each payment is a sale of that crypto for tax purposes, with its own gain or loss. Small payments are not exempt in the US or the UK today, so you need cost basis and a fair value for every one of them.

The US rule

The IRS treats virtual currency as property. Its FAQs say that if you pay for services with virtual currency held as a capital asset, you have a capital gain or loss equal to the fair market value of what you received less your adjusted basis in the currency you gave up [1]. The same applies when you exchange it for goods or other property [1].

Fair market value comes from the transaction itself where possible. For crypto traded on an exchange, the IRS points to the US dollar value the exchange records; for a peer-to-peer payment on-chain, you value it at the date and time the transaction is recorded on the ledger [1]. Your basis is what you paid to acquire the units, including fees [1].

Which units did you spend? The FAQs allow specific identification if your records can tie the payment to particular units, and otherwise treat the earliest units as sold first [1]. That choice needs documentation made at the time, not after year-end.

Individual returns carry the digital asset question, and the IRS says to answer yes if you transferred digital assets, including paying with them [2]. Disposals of capital assets go on Form 8949 [2]. Crypto paid to employees as wages is different again: the FAQs treat it as wages subject to withholding and reportable on Form W-2 [1].

The UK rule

HMRC lists using tokens to pay for goods or services as a disposal for Capital Gains Tax, alongside selling them, swapping them and giving them away [3]. Moving tokens between your own wallets is not a disposal, because beneficial ownership does not change [3].

You need the pound sterling value of the tokens at the time of each disposal, and HMRC expects records for each pool showing the date, the number of tokens disposed of and left, their sterling value and the pooled cost before and after [4]. Individuals can set gains against the annual exempt amount, currently 3,000 pounds [5], but that is an allowance against total gains for the year, not a per-payment exemption. Companies are in the same position under Corporation Tax on chargeable gains, which we cover separately.

What about a de minimis exemption?

Several US proposals would exempt small payments, but none is law as of October 2026.

• Senator Lummis's digital asset tax bill, introduced in July 2025, proposed a 300 dollar per-transaction exception for digital asset transactions and gains, capped at 5,000 dollars a year, with inflation indexing from 2026 [6].
• The House Digital Asset PARITY Act discussion draft from Representatives Miller and Horsford, released in December 2025, aimed to keep everyday stablecoin payments from triggering tax reporting [7].
• A revised PARITY draft in March 2026 dropped the 200 dollar de minimis limit and instead proposed that stablecoin sales recognise no gain or loss unless basis falls below 99 percent of redemption value [8].

The most advanced proposal is H.R. 10357, the Digital Asset Tax Certainty Act, which the House Ways and Means Committee approved 38-5 on 16 September 2026 [9]. As the Joint Committee on Taxation describes it, it would not exempt small purchases generally. Instead, no gain or loss would be recognised on network or transaction fees of 10 dollars or less paid in digital assets, and qualified US dollar stablecoins issued under the GENIUS Act would get their own rules [10]. It still has to pass the full House and the Senate.

Even if one of these passes, scope matters: a stablecoin-only rule would not help a company paying in ETH or BTC, and thresholds and exclusions have changed between drafts. Until something is enacted and effective, treat every payment as a disposal.

The book side

Accounting and tax diverge here. Under US GAAP, in-scope crypto assets are carried at fair value, so the book gain on a payment is measured against the last remeasured carrying amount, while the tax gain is measured against historical basis. The example below shows both.

What to do

• Record the dollar or sterling value of every crypto payment at the moment it settles, with the source of the price.
• Decide and document how you identify units spent (specific identification or first in, first out in the US; the UK pooling rules apply automatically).
• Treat network fees paid in the same asset as their own disposals.
• Reconcile book carrying amount and tax basis separately; they will not match under fair value accounting.
• Do not build processes around a de minimis exemption until one is enacted; recheck status before each filing season.

Sources

1. Frequently asked questions on virtual currency transactions (IRS)
2. Digital assets (IRS)
3. CRYPTO22100 - Cryptoassets for individuals: Capital Gains Tax: what is a disposal (HMRC)
4. Check if you need to pay tax when you sell cryptoassets (HMRC)
5. Capital Gains Tax: what you pay it on, rates and allowances — Allowances (GOV.UK)
6. Digital asset tax overhaul bill introduced (Grant Thornton)
7. Congressman Max Miller Releases Bipartisan Legislation to Modernize Tax Treatment of Digital Assets (Office of Rep. Max Miller)
8. April 1 Tax Policy Update (Sullivan & Cromwell)
9. Historic Digital Asset Tax Legislation Advances to Keep America the Crypto Capital of the World (House Committee on Ways and Means)
10. Description of H.R. 10357, the Digital Asset Tax Certainty Act (Joint Committee on Taxation)

General information for finance teams, current as of publication. Not legal, tax or accounting advice.

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