Holding Crypto Through a UK Limited Company: Corporation Tax, Not CGT — Rules, Rates and a Worked Comparison

Every few months a UK holder asks whether they should move their crypto into a limited company "for tax". Sometimes the answer is yes — usually for a business that already trades or earns in crypto. For a private investor it is often no, and the reason is that a company pays tax on the way in, on the gain, and again on the way out. This guide sets out how a company is taxed on crypto and puts the two routes side by side.

The basic position: Corporation Tax on everything

A company does not pay Capital Gains Tax or Income Tax. It pays Corporation Tax on its total profits, which include both trading profits and chargeable gains. HMRC's guidance for businesses is in the Cryptoassets Manual from CRYPTO40000 onwards, with Corporation Tax specifics at CRYPTO41000.

Corporation Tax rates for financial years from 1 April 2023:

Those thresholds are divided by the number of associated companies, so a director with two companies gets £25,000 and £125,000 each.

Chargeable gains in a company

When a company holds crypto as an investment, disposals produce chargeable gains computed under TCGA 1992 in broadly the same way as for an individual — proceeds less allowable cost under s.38, with s.104 pooling (CRYPTO41150). The differences:

• No annual exempt amount. The £3,000 exemption in s.1K is for individuals. A company's first pound of gain is taxed.
• No 18%/24% rates. The gain is added to profits and taxed at 19% to 25%.
• Different matching rules. For companies the 30-day bed-and-breakfast rule in s.106A does not apply. Instead s.107 matches disposals against acquisitions in the previous 10 days before going to the pool. There is no same-day rule as such; same-day acquisitions fall within the 10-day rule.
• Indexation allowance exists for companies but was frozen at December 2017 and is irrelevant for anything bought after that.
• Losses are set against the company's gains, in the year or carried forward against future gains, not against trading profits.

Trading in a company

If the company's activity amounts to a trade — frequent, organised dealing with a view to profit — the tokens are trading stock, valued at the year end, and profits are trading profits (CRYPTO41100). This is more likely to be found for a company than for an individual, because a company set up to trade crypto has, by its own account, been set up to trade crypto. The consequence is that unrealised movements are taxed through stock valuation, and losses are trading losses, which are more flexible.

Staking, mining and other income

Rewards received by a company are trading income if the company's activity is a trade, or miscellaneous income under CTA 2009 Part 10 if not, in either case at sterling value on receipt. Corporation Tax applies. There is no personal allowance and no Scottish complication — the Corporation Tax rate is UK-wide.

Getting the crypto in

Transferring tokens you own personally to your company is a disposal by you at market value, because you and the company are connected persons (TCGA 1992 s.18). If the tokens have gained since you bought them, you pay CGT on that gain personally on the way in. There is no holdover or incorporation relief for an investment portfolio — s.162 incorporation relief applies to a business, and s.165 gift relief to business assets, neither of which an investment holding is.

Getting the money out

The company's after-tax profits belong to the company. To get them to you personally they must be paid as salary (Income Tax plus employer and employee National Insurance), as dividends (dividend tax at 8.75%, 33.75% or 39.35% above the £500 allowance), or on winding up (CGT, possibly with Business Asset Disposal Relief at 14% — rising to 18% from April 2026 — if the company qualifies, which an investment company generally does not).

Worked comparison

Two identical outcomes: £40,000 of ETH bought, sold two years later for £100,000, a £60,000 gain. The individual is a higher-rate taxpayer with other income of £60,000. The company has no other profits and the director wants the money personally.

Held personally. - Gain £60,000, less £3,000 annual exempt amount = £57,000 - Higher-rate taxpayer, so CGT at 24%: £13,680 - Net in hand: £86,320

Held in a company, extracted as dividend. - Gain £60,000, no exemption. Profits £60,000 fall partly in the marginal relief band: £50,000 at 19% = £9,500 plus £10,000 at 26.5% = £2,650. Corporation Tax £12,150. - After-tax profit £47,850 plus the original £40,000 capital returns to the director. The £47,850 is paid as a dividend. Director is a higher-rate taxpayer: £500 at 0%, £47,350 at 33.75% = £15,981. - Total tax: £28,131. Net in hand: £71,869.

The company route costs roughly £14,450 more, before adding the cost of a company accountant, Companies House filings and the CGT that would have been due on transferring the ETH in. It only starts to make sense if the money stays in the company to be reinvested — deferring the dividend tax indefinitely — or if the company is already a trading business with losses or a use for the funds.

Worked example 2: the 10-day rule in a company

Because companies use s.107 rather than s.106A, the same trades can produce different gains in a company and in personal hands.

A company holds 10 ETH in its pool at £2,000 each (£20,000). On 1 March it buys 2 ETH at £3,200 each. On 8 March it sells 2 ETH at £3,300 each.

• Company (s.107, previous 10 days): the 8 March sale is matched against the 1 March purchase, seven days earlier. Gain = £6,600 − £6,400 = £200. The pool of 10 ETH at £20,000 is untouched.
• Individual (s.105/s.106A/s.104): no same-day purchase, no purchase in the 30 days after 8 March, so the sale comes from the pool at £2,000 each. Gain = £6,600 − £4,000 = £2,600. The 1 March purchase joins the pool.

Same trades, £200 of gain against £2,600, purely because the matching window looks backwards for companies and forwards for individuals. Any software configured for individuals will produce the wrong figure for a company on this pattern.

When a company does make sense

• The crypto is generated by a business: a developer paid in tokens, a validator operation, a mining operation with premises and staff.
• Profits will be reinvested inside the company rather than extracted, so the 19–25% rate is the only tax for now.
• The business has trading losses to absorb crypto gains, or the crypto gains are incidental to a larger trade.
• Multiple owners want a clean structure with shares rather than joint personal holdings.

For a private investor with a portfolio and a day job, holding personally is usually cheaper and simpler. The SIPP guide covers the pension wrapper question, which is the other structure people ask about.

Practicalities for company holdings

A company needs the same records as an individual — CRYPTO10400 lists them — plus statutory accounts under FRS 102 that recognise the tokens (usually as intangible assets or as stock) and a CT600 with the gains computation. The wallet or exchange account should be in the company's name. Banking is the hard part; several UK banks will not open accounts for companies whose primary activity is crypto. Accountants handling several crypto companies tend to want a per-entity Section 104 computation from software rather than a spreadsheet; cryptolens.uk's accountant tier keeps a separate pool per client for that reason, though the 10-day rule for companies is a distinct computation and should be checked by whoever prepares the CT600.

This is general information, not personal tax advice. Company structuring decisions should be taken with an accountant who has seen your full position.