Cryptocurrency Bought on Limited Compay

Keen_Investor · 13 January 2018 at 9:47PM

Hi,

Is it possible to form a limited company as one person (Myself) being the sole director. Then buy Cryptocurrency using that company.

The reason I ask is, I want to invest in Cryptocurrency over the long term, and reduce tax as much as possible legally on any gains when I eventually sell.

So corporation tax instead of Capital Gains tax. Or are there rules in place that would make this not possible?

Not sure of any implications?

Thanks

TheCyclingProgrammer · 13 January 2018 at 11:27PM

Why invest through a Ltd company?

Through a Ltd you’ll pay 19% CT on any gains (this should reduce to 18% in 2020) but you’ll have no allowances and additional costs and paperwork running the company.

Then, to extract those profits from the company as a dividend you’ll pay further income tax on those dividends (7.5% at basic rate and 32.5% higher rate). If your gains are high enough you’d need to consider extracting your profits over multiple years to avoid pushing your total income over the £100k threshold or you’d start losing your personal allowance.

Invest personally and you have an £11.3k tax free CGT allowance and depending on whether you’re a basic rate or higher/additional rate payer and your total gains you’ll pay either 10% or 20% in CGT.

HappyHarry · 13 January 2018 at 11:30PM

There is no theoretical reason why not, though there is not a great deal of difference in CGT for higher rate taxpayers and corporation tax.

However, how would you then extract the profit from the company without paying further tax?

Edit: crossed post with TheCyclingProgrammer’s much more detailed response!

Cryptocurrency Bought on Limited Compay

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