Bitcoin Dividends and UK Accounting, What Directors Actually Need to Know

UK directors holding Bitcoin on the balance sheet face a specific accounting question that most advisors cannot answer clearly. Here is what FRS 102 actually says and what it means for your reporting obligations.

Bitcoin is classified as an intangible asset under FRS 102 and IAS 38. It is held at cost with an annual impairment test required. If the price falls below your acquisition cost, you must record an impairment charge — a paper loss that affects your profit and loss account but does not require you to sell anything. If the price rises above cost, you cannot recognise that gain until disposal. This is the cost model.

Some companies elect the fair value model, which marks the position to market through the P&L each year. This creates more volatility in reported earnings but gives a more accurate picture of the balance sheet.

The choice between cost model and fair value model should be documented in your Bitcoin treasury policy before you acquire any Bitcoin. Your accountant needs to know which you have elected. The board resolution should reference it.

This is not complicated — but it needs to be deliberate. The companies getting this wrong are the ones who bought Bitcoin without a governance framework and are now having a difficult conversation with their auditor. The ones getting it right documented their approach before the first purchase. That is what the BTA framework exists to ensure.