A cryptocurrency exchange wants you to promote its latest product on YouTube. Rather than paying £10,000 into your bank account, it transfers Bitcoin directly to your wallet. Alternatively, you're a Twitch streamer who is paid in Ethereum for promoting a blockchain game. Maybe a Web3 company sends you USDC for posting about its latest token launch on X or TikTok. For many content creators, being paid in crypto for sponsorships is becoming increasingly common.
But it also raises an important question:
Do you pay tax if you're paid in crypto for sponsorships?
The short answer is yes, usually.
One of the biggest misconceptions we see is creators assuming they only pay tax when they eventually sell the crypto for pounds sterling. Unfortunately, generally speaking, that's not how the UK tax rules work.
In most cases, the crypto you receive is taxable as income when it's received. Additionally, if its value later changes before you sell, exchange or spend it, you could also have a separate Capital Gains Tax liability.
Understanding these rules is essential if you're accepting sponsorship income in Bitcoin, Ethereum, stablecoins or any other form of crypto.
In this guide, we'll explain:
Why This Matters
Crypto sponsorships are no longer restricted to influencers with millions of followers.
Today, many creators are approached by:
Rather than paying these sponsorship fees in conventional currency, many of these businesses opt to pay creators directly in crypto. For example, this may be because the sponsorship promotes a crypto-related product.
Either way, the tax implications can be very different from what many creators anticipate.
What Counts as a Crypto Sponsorship?
For tax purposes, in this context, a sponsorship is simply payment received in return for providing promotional services.
The fact you're paid in crypto instead of cash doesn't usually change the underlying tax treatment.
Examples include being paid in crypto for:
Whether you receive Bitcoin, Ethereum, USDC or another crypto, HMRC will generally look at why you received it rather than what you received.
In short, where the crypto is payment for your services, it's usually taxable as income.
Do You Pay Tax If You're Paid in Crypto for Sponsorships?
Many content creators assume that because they haven't received any money into their bank account, they don't have anything to declare on their tax return.
Unfortunately, that's one of the biggest misconceptions surrounding crypto sponsorships.
In most cases, being paid in crypto for a sponsorship is no different from being paid in cash.
If you receive cryptocurrency in return for creating content, promoting a product or providing marketing services, HMRC will generally treat the crypto as payment for your work.
The fact that you receive Bitcoin, Ethereum or a stablecoin instead of pounds sterling doesn't usually change the underlying tax treatment.
Generally speaking, the crypto is taxable as income when you receive it.
The taxable amount is usually based on the sterling market value of the cryptocurrency on the date it is received.
For many creators, this comes as a surprise because they assume tax is only payable when they eventually sell the crypto.
In reality, receiving the crypto and later disposing of it are often two separate transactions, both with their own tax implications.
How HMRC Values Crypto Received for Sponsorships
Once it's determined that the crypto represents payment for your services, the next question is:
How much income do you declare?
HMRC is interested in the value of the crypto on the date you receive it, not what it may be worth several weeks or months later.
This principle applies if you're paid in:
The value of the crypto is simply converted into pounds sterling using its market value when you receive it. This is the amount that will generally be taken into account when calculating your taxable income.
Let's look at a practical example:
Example
Emily runs a successful gaming channel on YouTube.
A cryptocurrency exchange asks her to produce a sponsored review of its platform.
Instead of paying her £8,000 by bank transfer, it sends 0.08 Bitcoin directly to her wallet
On the day she receives the Bitcoin, it is worth £8,000.
For tax purposes, Emily has received £8,000 of sponsorship income.
It makes no difference that:
The taxable income arises when the sponsorship payment is received, not when the Bitcoin is eventually sold.
What If You're Paid in Stablecoins?
However, given crypto's volatility, not every crypto sponsorship is paid in Bitcoin.
Increasingly, Web3 businesses, blockchain gaming companies and crypto exchanges prefer to pay creators using stablecoins such as USDC or USDT.
Many creators assume this changes the tax position because stablecoins are designed to maintain a relatively stable value. Unfortunately, that's not currently the case.
Currently, if you're paid in a stablecoin for providing sponsorship services, HMRC will generally treat the sterling value of those stablecoins as taxable income when you receive them.
For example, if you're paid 10,000 USDC for producing sponsored content, and those tokens are worth £7,400 on the date you receive them, your sponsorship income will generally be £7,400.
The fact that the payment is made in crypto rather than pounds doesn't usually alter the Income Tax position. Importantly, stablecoins, like other cryptoassets, introduce an additional complexity that many creators overlook.
Under the current UK tax rules, if you later exchange, spend or dispose of those stablecoins, you may also need to consider Capital Gains Tax.
This means a single sponsorship payment can potentially give rise to both Income Tax and Capital Gains Tax at different stages.
However, this may not apply in future where sponsorship payments are received in qualifying stablecoins. You can read about the proposed changes in our guide here.
The Hidden Tax Trap: Why You Could Pay Tax Twice
One of the biggest misunderstandings surrounding crypto sponsorships is the belief that paying Income Tax means you won't pay tax again.
Unfortunately, that isn't necessarily true. Receiving cryptocurrency for your sponsorship is one transaction. Selling, exchanging or spending that cryptocurrency is another.
Imagine you're paid £12,000 worth of Ethereum for promoting a new blockchain game.
When you receive the Ethereum, the £12,000 will generally form part of your taxable income.
Six months later, the value of the Ethereum has increased to £18,000, and you decide to sell it.
The increase in value since you received the Ethereum may give rise to a Capital Gains Tax liability.
In other words:
This isn't being taxed twice on the same income. Instead, it's two separate taxable events arising at different points in time.
Understanding this distinction is essential for anyone regularly receiving crypto as payment for sponsorships or brand collaborations.
What Happens If the Crypto Falls in Value?
One of the biggest risks of accepting sponsorship payments in crypto is that its value can change dramatically after you've received it. Many creators understandably assume that if the cryptocurrency falls in value, their tax bill will fall too. Unfortunately, that's not usually how it works.
As we've already explained, your sponsorship income is generally based on the sterling market value of the cryptocurrency on the date you receive it. Therefore, if the value later falls, it doesn't reduce the amount of income you originally received.
Example
James is a YouTuber who receives £15,000 worth of Bitcoin for promoting a crypto exchange on his channel.
At the time of payment, the Bitcoin is worth exactly £15,000, so this is the amount that generally forms part of his taxable income.
Six months later, the price of Bitcoin has fallen significantly and his holdings are now worth only £9,000.
Although James has suffered an economic loss, this doesn't change the value of the sponsorship income he originally received and on which he pays tax.
This can create cash-flow problems if you've held onto the crypto instead of setting funds aside to pay your tax liability.
For this reason, many creators choose to exchange at least part of their sponsorship payment into currency shortly after receiving it. That way, they ensure they have sufficient funds to meet their future tax liabilities.
What If the Crypto Increases in Value?
Of course, crypto prices don't always decrease in value. If the value of your sponsorship payment increases after you've received it, the increase isn't normally taxed as additional sponsorship income.
Instead, the increase in value may become relevant when you later dispose of the crypto.
Example
Emma receives £6,000 worth of Ethereum for producing sponsored content.
That £6,000 is generally taxable as income when she receives it.
Two years later, the Ethereum is worth £11,500, and she decides to sell it.
The increase in value since she received the Ethereum may give rise to a Capital Gains Tax liability when it's sold.
In straightforward terms:
What If You Never Sell the Crypto?
Another common question we hear is:
"What if I just keep the crypto and never sell it?"
Holding onto the crypto doesn't usually change the Income Tax position. If you received the crypto as payment for your sponsorship, the income generally arose when you received it. Keeping the crypto in your wallet for several years won't normally defer that Income Tax liability.
However, if you continue holding the crypto, there may not be a Capital Gains Tax liability until you eventually dispose of it. Depending on your circumstances, a disposal could include:
This distinction often surprises creators who believe tax only arises once money reaches their bank account.
What If Your Limited Company Receives the Sponsorship?
Many established creators operate through their own limited company rather than as sole traders.
If that's the case, the tax position is different. Instead of you receiving the sponsorship income personally, the crypto is received by the company.
The company will generally recognise income based on the sterling value of the crypto when it is received. The crypto then becomes an intangible asset owned by the company.
If the company later sells or exchanges that crypto, the tax implications will depend on the relevant Corporation Tax rules applying at that time. However, broadly speaking, any profit realised on the disposal of the crypto will be subject to Corporation Tax. Conversely, any loss arising on the sale can be offset against the company's total profits.
What About VAT?
Receiving payment in cryptocurrency doesn't usually change the normal VAT rules. Therefore, if your sponsorship fees are subject to UK VAT, being paid in Bitcoin, Ethereum or stablecoins instead of pounds sterling doesn't normally remove the requirement to account for VAT.
The key point is that cryptocurrency is simply the method of payment. The VAT treatment generally depends on the nature of the services being supplied, where your customer belongs and whether your business is VAT registered.
For creators working with overseas sponsors, the VAT position can become considerably more complicated, particularly where sponsorship services are supplied to businesses established outside the UK. In this case, it may be that the payment is considered outside the scope of UK VAT.
Record Keeping
Accurate record keeping is one of the most important aspects of managing crypto sponsorship income. This is because unlike traditional bank payments, crypto transactions often involve multiple wallets, exchanges and blockchain networks.
If HMRC ever asks how you've calculated your taxable income, you'll need to demonstrate how you arrived at the earnings you've disclosed.
Therefore, we recommend keeping records of:
Good record keeping can also save considerable time and expense if HMRC opens an enquiry.
The Most Common Mistakes We See
Having advised crypto investors and content creators for many years, we regularly see the same mistakes repeated. The most common include:
Most of these mistakes are entirely avoidable. Understanding the tax rules before accepting crypto for sponsorships can help you avoid unexpected tax liabilities, penalties and lengthy correspondence with HMRC.
Frequently Asked Questions
Do You Pay Tax If You're Paid in Crypto for Sponsorships?
In most cases, yes.
If you're paid in crypto in return for promoting a product, creating content or providing marketing services, HMRC will generally treat the sterling value of the crypto you receive as taxable income when you receive it.
If the crypto later increases or decreases in value before you dispose of it, you may also need to consider the Capital Gains Tax implications.
What If I Never Convert the Crypto Into Pounds?
This is one of the greatest misconceptions surrounding crypto sponsorships. Many creators believe they only pay tax when the crypto hits their bank account.
Unfortunately, that's not generally how the rules work.
If you're paid in crypto for your services, it's taxable when you receive it, regardless of whether you immediately sell it or continue holding it.
How Do I Work Out the Value of the Crypto?
You'll generally need to determine the sterling market value of the crypto on the date you receive it. However, most reputable exchanges provide historical pricing data, and many crypto tax software packages will calculate these values automatically.
Whatever method you use, it's important to retain evidence showing how you arrived at the valuation in case HMRC requests it.
Are Stablecoins Taxed Differently?
Usually not.
Although stablecoins such as USDC and USDT are designed to maintain a relatively stable value, they are currently still treated as cryptoassets for UK tax purposes. However, the position is expected to change from 6 April 2027 under the proposed legislation, as explained in our guide here .
Therefore, if you receive stablecoins as payment for sponsorship services, the sterling value will generally be taxable as income when you receive them.
Summary
As crypto becomes increasingly popular, more brands are opting to pay creators, influencers, gamers and streamers directly in digital assets instead of cash.
So, do you pay tax if you're paid in crypto for sponsorships?
In most cases, the answer is yes.
Consequently, receiving Bitcoin, Ethereum, stablecoins or other crypto as payment for your services will generally give rise to taxable income based on the sterling market value of the crypto when you receive it.
If you later sell, exchange or spend your crypto, you may also need to consider the Capital Gains Tax implications.
The rules can be more complicated than many creators expect, particularly where values fluctuate significantly or sponsorship income is received through a limited company.
Therefore, understanding the tax implications before accepting payment can help you avoid unexpected tax liabilities and ensure you remain compliant with HMRC.
Need Advice on Crypto Taxes and Sponsorship?
Whether you're an influencer, YouTuber, Twitch streamer, esports professional, game developer or digital content creator, receiving payment in cryptocurrency can create tax issues that aren't always obvious.
At The Friendly Accountants, we regularly advise creators, crypto businesses and investors on the UK tax treatment of crypto transactions.
Get in touch with our crypto tax specialists today for tailored advice.
For more useful information, check out our Ebooks here.
And if you'd like to know how we can help you with all of this, or with anything else, feel free to give us a call on 01202 048696 or email us at [email protected].
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