Should I invest through a limited company or personally?

In short: In 2026/27 you pay tax on dividends above £500 and on gains above £3,000, while a qualifying company dividend is often exempt (GOV.UK: tax on dividends). Taxley prepares and files an investment company's CT600 with small-company accounts for £129, and files the accounts at Companies House once the return is paid and the accounts are finished.

Take the 30-second check to see whether Taxley fits your company, or see the price for your company.

Key facts (checked on 21 October 2026)

Should you invest through a limited company or personally?

Holding shares yourself and holding them in a company are taxed at different times. In 2026/27 you have a £500 dividend allowance, a £3,000 gains allowance and an ISA. A company pays Corporation Tax on a gain and has no annual exempt amount. A later dividend can be taxed again.

The choice is a trade-off between tax while the money stays invested and tax when you take it. In 2026/27 dividends above £500 are taxed at 10.75%, 35.75% or 39.35%, and ISA dividends are not taxed (GOV.UK: tax on dividends). A company that meets the tests can receive those dividends exempt, then pay Corporation Tax on a gain. A later dividend is not deductible, and the shareholder may pay Income Tax on it (GOV.UK: taking money out of a limited company). A close investment-holding company pays the main rate on the gain. The company figures go on the investment company CT600.

How are dividends taxed for you and for a company?

For 2026/27 the first £500 of dividends is not taxed, then the rates are 10.75%, 35.75% and 39.35%. A small company can receive a dividend exempt only where CTA 2009 section 931B is met. The exemption does not set the rate on the company's other profits.

Add the dividends to other income, because more than one rate can apply. From 6 April 2026 to 5 April 2027 the allowance is £500. Dividends in the Personal Allowance, and dividends from ISA shares, are not taxed (GOV.UK: tax on dividends). Section 931B exempts a dividend a small company receives only if the payer is resident only in the UK or a qualifying territory, it is not a paragraph E or F distribution, no overseas deduction is allowed, and it is not a tax-advantage scheme (CTA 2009 s.931B). One failed condition removes the exemption. See dividends a company receives. Take advice on a fund, a group company or a scheme.

How are interest and gains taxed in each case?

You may have a Personal Savings Allowance. Those are Income Tax allowances. On a gain, you have a £3,000 allowance in 2026/27 and then pay 18% or 24%. A company pays Corporation Tax on the gain and has no annual exempt amount. This example includes no interest.

From 6 April 2026 to 5 April 2027 the Personal Allowance is £12,570. England, Wales and Northern Ireland charge 20% from £12,571 to £50,270, 40% from £50,271 to £125,140 and 45% above that. Scotland uses different bands (GOV.UK: Income Tax rates). Interest can use a starting rate of up to £5,000 where other income, apart from savings and dividends, is under £17,570, then a Personal Savings Allowance of £1,000, £500 or £0 (GOV.UK: tax on savings interest). Those are Income Tax allowances. Corporation Tax charges non-trading loan-relationship profits (CTA 2009 s.299). From 6 April 2026 a higher or additional rate taxpayer pays 24% on a gain, and a basic rate taxpayer pays 18% then 24%, after £3,000 and the £37,700 band (GOV.UK: Capital Gains Tax rates). Only an individual deducts that £3,000 (TCGA 1992 s.1K; HMRC manual CG10247). Cost on or after 1 January 2018 gets no indexation, frozen at December 2017 (TCGA 1992 s.54). See company chargeable gains.

Can a company use an ISA or a pension the way you can?

An ISA and a personal pension belong to a person, not to a company. In 2026/27 the ISA maximum is £20,000, and interest, income and gains inside an ISA are not taxed. A pension has its own annual allowance. Neither wrapper holds shares the company owns.

You must be 18 or over, and either UK resident or a Crown servant, an armed-forces member, or their spouse or civil partner if you do not live in the UK. You cannot hold an ISA with someone else. A company is not that person, so it cannot open one. The 2026/27 maximum is £20,000 (GOV.UK: Individual Savings Accounts). Income and gains inside an ISA are not taxed. Existing shares transfer in only from an employee share scheme, so this £200,000 cannot all go in during one year (GOV.UK: how ISAs work). From 6 April 2026 to 5 April 2027 (GOV.UK: Income Tax rates) the pension annual allowance is £60,000, including an employer's payments, and can be lower after flexible access or if threshold income exceeds £200,000 and adjusted income exceeds £260,000 (GOV.UK: annual allowance). See director pension contributions. No Corporation Tax deduction is claimed for that payment here.

When does a close investment-holding company pay 25%?

These companies pay the main rate, with no small profits rate and no marginal relief. From 1 April 2026 that rate is 25%, even on a small gain. A close company that simply holds investments is the usual case. The dividend exemption is a separate test.

Control by five or fewer participators, or by participators who are directors, can make a company close, subject to sections 442 to 447 (CTA 2010 s.439). It is then a close investment-holding company unless throughout the period it exists wholly or mainly for a permitted purpose, such as a commercial trade, commercial letting to an unconnected person, or holding shares in qualifying companies it controls (CTA 2010 s.18N). HMRC charges that company at the main rate, with no small profits rate and no marginal relief (HMRC: CTM03951; CTA 2010 s.18A; GOV.UK: Marginal Relief). From 1 April 2026 a close investment-holding company pays the 25% main rate even where its profits are under £50,000. The 20% row is for unit trusts and open-ended investment companies, not a private company holding a portfolio (GOV.UK: Corporation Tax rates). A company that is not a close investment-holding company can still pay 19%.

How are offshore funds taxed for a person and for a company?

A non-reporting offshore fund can produce an offshore income gain on disposal. You pay Income Tax on it and a company pays Corporation Tax. The £3,000 gains allowance and the £500 dividend allowance do not shelter that income. A reporting fund is not charged merely because it is offshore.

Regulation 17 charges the disposal where condition A or B is met. In outline, condition A is an interest in a non-reporting fund at disposal. Condition B, in outline, is an interest in a reporting fund that was previously non-reporting, where no regulation 48 election was made. Further limbs apply (reg. 17). That amount is income, charged to Income Tax or to Corporation Tax (reg. 18). Where regulation 17 does not apply, a company's gains less losses go into total profits (HMRC manual CG10247). An individual then uses Capital Gains Tax (GOV.UK: Capital Gains Tax rates). Reporting status comes from HMRC's list or the fund documents. The worked example is shares, not this charge.

What tax does a £200,000 portfolio pay in 2026/27?

A higher-rate taxpayer in England, Wales or Northern Ireland keeps £21,238.75 of the £28,000 taxable return. A company that is not a close investment-holding company keeps £24,200 of that return. Paying it out leaves £15,727.25. A close investment-holding company leaves £14,956.25 after the same step. These are alternative endings.

The portfolio is £200,000, dividends are £8,000 (4%) and the gain is £20,000, giving a taxable return of £28,000. Shares bought on or after 1 January 2018 get no indexation (TCGA 1992 s.54). The person is a higher-rate taxpayer in England, Wales or Northern Ireland. Other income has used the Personal Allowance and basic-rate band, and total income including the £8,000 dividends stays at or below £100,000, so that allowance is not reduced (GOV.UK: Income Tax rates). Both allowances are unused elsewhere, nothing is in an ISA, and there is no interest, loss or cost. Dividend tax is (£8,000 − £500) × 35.75% = £2,681.25 (GOV.UK: tax on dividends). Capital Gains Tax is (£20,000 − £3,000) × 24% = £4,080 (GOV.UK: Capital Gains Tax rates). Personal tax is £6,761.25, leaving £21,238.75 of the return. The company is UK resident and small for the dividend exemption, for 1 April 2026 to 31 March 2027, with no associated companies, so the £50,000 limit is not divided (GOV.UK: Marginal Relief). The dividends meet section 931B, are not excluded, and augmented profits of £28,000 stay under £50,000 (CTA 2010 s.18L).

If the company is not a close investment-holding company, tax is £20,000 × 19% = £3,800 and it keeps £24,200 of the return (GOV.UK: Corporation Tax rates). Assume that amount is available profit: accounts profit and tax profit can differ. Paying £24,200 out on 31 March 2027 costs (£24,200 − £500) × 35.75% = £8,472.75, leaving £15,727.25. A close investment-holding company pays £20,000 × 25% = £5,000, keeps £23,000 of the return, then (£23,000 − £500) × 35.75% = £8,043.75, leaving £14,956.25. A dividend is not deductible and cannot exceed available profits (GOV.UK: taking money out). Do not add the routes together. Inside the basic-rate band the personal rates would be 10.75% and 18%. Running costs are ignored. Take advice if the band, reserves or status differ.

Of the £28,000 taxable return, personal holding leaves £21,238.75, against £15,727.25 or £14,956.25 if the company pays that profit out. Left invested, the company keeps £24,200, or £23,000 as a close investment-holding company, and shareholder dividend tax is still due later. An ISA changes the personal result; none of this £200,000 portfolio is in one, and the yearly limit is £20,000 (GOV.UK: Individual Savings Accounts). Retaining profit in a company defers shareholder dividend tax, but company status, dividend exemption, tax band, associated companies and later extraction all change the comparison. The figures therefore do not establish a generally preferable route. Take advice where the facts differ.

Can Taxley file an investment company's Company Tax Return?

Yes, for a UK investment company within its limits. Taxley (taxley.co.uk), UK online software that prepares and files the Company Tax Return (CT600) with HMRC and the annual accounts with Companies House, has a "Holds investments" route that prepares small-company accounts and the CT600 for £129. It files the accounts at Companies House once the return is paid and the accounts are finished.

In that route, “Holds investments” means no trade or letting: the company holds funds, shares, bonds, crypto or cash and pays its running costs. It uses small-company accounts under FRS 102 Section 1A and the Standard editor; a close investment-holding company is outside Simple mode. Enter only dividends you have established are exempt as franked investment income; the accounts dividends line is separate. Taxley works out most sales of UK property and shares bought in one go, with indexation to December 2017. A connected sale, gift, rollover, group transfer or reorganisation needs a figure you have worked out. Enter a non-reporting fund disposal as offshore income, not an ordinary chargeable gain. Taxley is for limited companies only: it does not file the shareholder’s Self Assessment, an LLP return, a VAT return or payroll. It does not give tax advice or pay Corporation Tax. See the investment company CT600 or take the 30-second check.

Frequently asked questions

Does a company get the £3,000 Capital Gains Tax allowance?

No. Companies are not entitled to an annual exempt amount. Chargeable gains, less losses, go into total profits and are charged to Corporation Tax. The £3,000 allowance for 2026/27 is deducted from an individual's gains, not from a company's.

Do exempt dividends restore the 19% small profits rate?

No. Exempt dividends are outside the Corporation Tax charge, but a close investment-holding company still pays the main rate. For the year from 1 April 2026 that rate is 25%, even where the gain is under £50,000. The exemption does not restore 19%.

Is the 20% special rate the rate a portfolio company pays?

No. That 20% row is for unit trusts and open-ended investment companies. A private company holding shares and funds pays 19% or 25% where the small profits rules apply, and 25% if it is a close investment-holding company. The example uses 19% or 25%, not 20%.

Can existing shares be moved into an ISA in one tax year?

No. Non-ISA shares can be transferred in only from an employee share scheme. The 2026/27 maximum is £20,000, so £200,000 cannot all be subscribed in one year. Income and gains inside an ISA are not taxed. A company cannot open an ISA.

Does a basic-rate taxpayer pay the worked example's personal tax?

No. The example uses 35.75% on dividends above £500 and 24% on the gain above £3,000, for a higher-rate taxpayer in England, Wales or Northern Ireland. A basic-rate taxpayer pays 10.75% and 18% on amounts inside the basic-rate band, so that personal bill would be lower.

Who pays tax when the company pays a dividend?

The company does not pay Corporation Tax on the dividend and cannot deduct it. It must not pay more than its available profits. The shareholder may pay Income Tax above the £500 allowance, at 10.75%, 35.75% or 39.35% for 2026/27, once other income has set the band.

General information, not personalised tax or accounting advice. Rates and rules checked on 21 October 2026.