--- title: "Capital Gains Tax Vs Corporation Tax: What's The Difference?" description: Learn the difference between capital gains tax vs corporation tax and how each affects business profits, tax liabilities and financial planning. image: https://www.linkupaccounts.co.uk/hubfs/LinkUp%20Blog%201.jpg --- [0203 693 1257](tel:02086806198) [info@linkupaccounts.co.uk](mailto:info@linkupaccounts.co.uk) [0208 680 6198](tel:02086806198) [info@linkupaccounts.co.uk](mailto:info@linkupaccounts.co.uk) [![Link Up Account Logo](https://www.linkupaccounts.co.uk/hs-fs/hubfs/Images/link-up-logo.webp?width=400&height=100&name=link-up-logo.webp "Link Up Account Logo")](https://146949618.hs-sites-eu1.com/home) [![Link Up Account Logo](https://www.linkupaccounts.co.uk/hs-fs/hubfs/Images/link-up-logo.webp?width=400&height=100&name=link-up-logo.webp "Link Up Account Logo")](https://146949618.hs-sites-eu1.com/home) - [Home](https://www.linkupaccounts.co.uk) - [About](https://www.linkupaccounts.co.uk/accountancy-and-tax-services) - Services - [Accounting](https://www.linkupaccounts.co.uk/accountants-for-limited-companies) - [Tax Advice](https://www.linkupaccounts.co.uk/business-tax-advice) - [Financial Management](https://www.linkupaccounts.co.uk/financial-management) - How We Help - [Outside IR35](https://www.linkupaccounts.co.uk/outside-ir35-accountant) - [Tax Optimisation](https://www.linkupaccounts.co.uk/tax-optimisation) - [Ltd Companies Dividends](https://www.linkupaccounts.co.uk/limited-company-tax-dividends) - [Limited Companies](https://www.linkupaccounts.co.uk/switching-from-umbrella-to-limited-company) - [Benefits of Using a Proactive Accountant](https://www.linkupaccounts.co.uk/complete-accounting-solutions) - [Corporation Tax Advice](https://www.linkupaccounts.co.uk/corporation-tax-advice-that-helps-you-protect-your-profits) - Resources - [Free Financial Health Check](https://www.linkupaccounts.co.uk/financial-health-check) - [Blog](https://www.linkupaccounts.co.uk/blog) - [How to Reduce Corporation Tax (Legally) Free Guide](https://www.linkupaccounts.co.uk/reduce-corporation-tax-legally) - [Contact Us](https://www.linkupaccounts.co.uk/contact-us) More results [Book A Consultation](https://www.linkupaccounts.co.uk/book-a-consultation) [Book A Consultation](https://www.linkupaccounts.co.uk/book-a-consultation) [Book A Consultation](https://www.linkupaccounts.co.uk/book-a-consultation) - [Home](https://www.linkupaccounts.co.uk) - [About](https://www.linkupaccounts.co.uk/accountancy-and-tax-services) - Services - [Accounting](https://www.linkupaccounts.co.uk/accountants-for-limited-companies) - [Tax Advice](https://www.linkupaccounts.co.uk/business-tax-advice) - [Financial Management](https://www.linkupaccounts.co.uk/financial-management) - How We Help - [Outside IR35](https://www.linkupaccounts.co.uk/outside-ir35-accountant) - [Tax Optimisation](https://www.linkupaccounts.co.uk/tax-optimisation) - [Ltd Companies Dividends](https://www.linkupaccounts.co.uk/limited-company-tax-dividends) - [Limited Companies](https://www.linkupaccounts.co.uk/switching-from-umbrella-to-limited-company) - [Benefits of Using a Proactive Accountant](https://www.linkupaccounts.co.uk/complete-accounting-solutions) - [Corporation Tax Advice](https://www.linkupaccounts.co.uk/corporation-tax-advice-that-helps-you-protect-your-profits) - Resources - [Free Financial Health Check](https://www.linkupaccounts.co.uk/financial-health-check) - [Blog](https://www.linkupaccounts.co.uk/blog) - [How to Reduce Corporation Tax (Legally) Free Guide](https://www.linkupaccounts.co.uk/reduce-corporation-tax-legally) - [Contact Us](https://www.linkupaccounts.co.uk/contact-us) [Book A Consultation](https://www.linkupaccounts.co.uk/book-a-consultation) [0208 680 6198](tel:02086806198) [info@linkupaccounts.co.uk](mailto:info@linkupaccounts.co.uk) [Tax Advice UK](https://www.linkupaccounts.co.uk/blog/tag/tax-advice-uk) # Corporation Tax vs Capital Gains Tax: How Do They Impact Profits? by [Link Up Accounts](https://www.linkupaccounts.co.uk/blog/author/link-up-accounts) 3 min read Jul 9, 2026, 11:00:00 AM As a limited company director, understanding how different taxes affect your profits is vital to manage your business tax-efficiently. [![Free Financial Health Check](https://hubspot-no-cache-eu1-prod.s3.amazonaws.com/cta/default/146949618/interactive-383535071419.png)](https://www.linkupaccounts.co.uk/hs/cta/wi/redirect?encryptedPayload=AVxigLIw7Q%2FiEZ0GF9WjYwjGRylFoFbNMCbdTOt6GtoVz4neo5%2FRzmJkqI02jKBCuwuUUlis2%2ByTMZhcCUn6h0TtJlVtGyXuprtlxDpaSTKewq9Lde3T3h3cy7pcPgKKwowlmSnShGt4MLel7wEp8Lzt4PA0MReZS31QbOY1Qz4X4oWfxRZBLSVt%2B9voVTl13LRX5HF%2B1z3XYCl%2B7nHlPcvBmXiscsL30W2WdzrvumYskwA%3D&webInteractiveContentId=383535071419&portalId=146949618) Two common levies you'll encounter when running a business or selling assets are capital gains tax and corporation tax. Both can reduce the money available to you or your business, but they apply in different situations and are calculated in different ways. If you're looking to maximise retained profits, grasping the distinction between [capital gains tax vs corporation tax](https://www.linkupaccounts.co.uk/corporation-tax-advice-that-helps-you-protect-your-profits) is essential. Let's take a closer look. ## **Understanding Capital Gains Tax** [Capital gains tax](https://www.gov.uk/guidance/capital-gains-tax-rates-and-allowances) is a personal tax charged on the profit made when you sell or dispose of an asset that has increased in value. Note that the gain you make is the amount that gets taxed, not the total amount of money you receive. For company directors, this tax most commonly applies when you sell shares in your business or dispose of personal assets used for commercial purposes. This may include vehicles, furniture or technology. ### **Short Term vs Long Term Capital Gains Tax** While some tax systems separate short-term and long-term capital gains, the UK system takes a different approach. Standard UK rates depend on your personal income tax band, currently standing at 18% for basic rate taxpayers and 24% for higher-rate taxpayers. However, the length of time you hold an asset still makes a difference to tax liability. If you hold business assets or company shares for at least two years, you may qualify for Business Asset Disposal Relief. This relief can significantly lower your tax burden should you decide to sell your business. ### How Capital Gains Tax is Calculated? Calculating your liability involves taking the final sale price of the asset and deducting the original purchase cost. You can also deduct certain allowable expenses, like solicitor fees or improvement costs. Every individual has an annual tax-free allowance, which sits at £3,000 for the 2026/27 tax year. You only pay tax on the profit that sits above this threshold. ## **Understanding Corporation Tax** Unlike personal taxes, [corporation tax](https://www.gov.uk/government/publications/rates-and-allowances-corporation-tax/rates-and-allowances-corporation-tax) is levied directly on the profits of a limited company. This tax applies to the money your company makes from doing business, from investments, and from selling corporate assets for a profit (known as chargeable gains). ### **Effective Tax Rate for Corporations** The UK uses a tiered system for corporate profits. The main rate of Corporation Tax is 25% for companies with profits exceeding £250,000. If your company generates profits under £50,000, you pay the small profits rate of 19%. Companies with profits sitting between these figures benefit from marginal relief. This means their effective tax rate gradually increases from 19 to 25% based on their exact profit level. ### **The Calculation of Corporation Tax** To calculate your corporate tax liability, you take your company's total income and deduct all allowable business expenses, such as staff salaries, office rent, and equipment purchases. You also add any chargeable gains made from selling company-owned assets. The resulting figure is your taxable profit. You must report this figure to HMRC annually by filing a Company Tax Return. ## **Comparing Capital Gains Tax and Corporation Tax** When weighing [capital gains tax vs corporation tax](https://www.linkupaccounts.co.uk/corporation-tax-advice-that-helps-you-protect-your-profits), the fundamental difference lies in who owns the asset and who pays the final bill. ### Key Differences If you own an asset personally and sell it for a profit, you're liable for capital gains tax. If your limited company owns an asset and sells it for a profit, the company [pays corporation tax](https://www.linkupaccounts.co.uk/blog/benefits-of-paying-corporation-tax-early) on that chargeable gain. Furthermore, companies don't receive an annual tax-free allowance for their gains in the way individuals do. Every pound of profit made from selling a corporate asset is subject to tax. ### Advantages and Disadvantages Holding assets within a company may be tax-efficient in some circumstances, particularly where profits are being retained for business use. However, extracting those profits personally can create additional tax, so the overall position should be considered before deciding where assets should be held. This makes a limited company an attractive vehicle for accumulating wealth. The disadvantage is that extracting those profits from the company for personal use triggers additional dividend taxes or income tax, resulting in a potential double tax charge. ## **Capital Gains Tax Planning for Corporations** Effective tax planning requires a strategic approach to how your business holds and disposes of assets. For instance, if your company sells a piece of commercial property, you can often defer the corporation tax due on that chargeable gain by using Rollover Relief, provided you reinvest the proceeds into a new qualifying business asset. Navigating the complex overlap between corporate and personal taxation is challenging. Making an uninformed decision about asset ownership can cost your business thousands of pounds. Seeking expert advice from professional Corporation Tax Accountants ensures your asset strategy is perfectly aligned with HMRC rules and highly tax-efficient. Are you unsure how the latest tax rates impact your business profits? Contact us today to claim your [Free Financial Health Check](https://www.linkupaccounts.co.uk/book-a-consultation). We'll review your current financial structure and connect you with the right experts to optimise your tax position. [![NEW Tax Health check Long CTA 1](https://hubspot-no-cache-eu1-prod.s3.amazonaws.com/cta/default/146949618/interactive-326324396261.png)](https://www.linkupaccounts.co.uk/hs/cta/wi/redirect?encryptedPayload=AVxigLKtnJ6InI2xw0bqsaH2q7jPHtT0AH8nYMczZG4EB2F%2BAHv12p7beppiSwyqw3zLN%2FXQFolXyL3WShF19MMIobH92lomRDXw3F6TepSBbZGhGcJra2D4i%2FhKhou0KZlhH2R861e3Tpvs0KR7OTBdKxh8SMMWqtEDab1fTQrOxwmGAZmkGGYpvcMrCyrnX5XqORLdurCGXSRAuXocZnYpbtDYwma9ocR0ApXZUN2vXu0%3D&webInteractiveContentId=326324396261&portalId=146949618) Image Source: [Envato](https://app.envato.com/search/photos/3ef3974b-a37b-430c-9cc9-8d89aad917af?itemType=photos&term=+tax&filter.orientation=Landscape) - Recent - Topics - Archive Recent Topics - [Tax Advice UK (12)](https://www.linkupaccounts.co.uk/blog/tag/tax-advice-uk) - [Tax-advice (10)](https://www.linkupaccounts.co.uk/blog/tag/tax-advice) - [Accounting (8)](https://www.linkupaccounts.co.uk/blog/tag/accounting) - [Case Studies (4)](https://www.linkupaccounts.co.uk/blog/tag/case-studies) - [VAT-advice (3)](https://www.linkupaccounts.co.uk/blog/tag/vat-advice) - [limited-company (3)](https://www.linkupaccounts.co.uk/blog/tag/limited-company) - [outside IR35 (2)](https://www.linkupaccounts.co.uk/blog/tag/outside-ir35) See all Archive - [September 2026 (3)](https://www.linkupaccounts.co.uk/blog/archive/2026/09) - [August 2026 (4)](https://www.linkupaccounts.co.uk/blog/archive/2026/08) - [July 2026 (8)](https://www.linkupaccounts.co.uk/blog/archive/2026/07) - [June 2026 (4)](https://www.linkupaccounts.co.uk/blog/archive/2026/06) - [May 2026 (7)](https://www.linkupaccounts.co.uk/blog/archive/2026/05) - [April 2026 (3)](https://www.linkupaccounts.co.uk/blog/archive/2026/04) - [March 2026 (1)](https://www.linkupaccounts.co.uk/blog/archive/2026/03) - [January 2026 (3)](https://www.linkupaccounts.co.uk/blog/archive/2026/01) - [December 2025 (4)](https://www.linkupaccounts.co.uk/blog/archive/2025/12) - [November 2025 (3)](https://www.linkupaccounts.co.uk/blog/archive/2025/11) See all ### Subscribe by email Share this [Share on X](https://x.com/intent/post?url=https://www.linkupaccounts.co.uk/blog/capital-gains-tax-vs-corporation-tax&text=Capital+Gains+Tax+Vs+Corporation+Tax%3A+What%27s+The+Difference%3F) [Share on Facebook](https://www.facebook.com/sharer/sharer.php?u=https://www.linkupaccounts.co.uk/blog/capital-gains-tax-vs-corporation-tax&t=Capital+Gains+Tax+Vs+Corporation+Tax%3A+What%27s+The+Difference%3F) [Share on LinkedIn](https://www.linkedin.com/shareArticle?mini=true&url=https://www.linkupaccounts.co.uk/blog/capital-gains-tax-vs-corporation-tax&t=Capital+Gains+Tax+Vs+Corporation+Tax%3A+What%27s+The+Difference%3F) Previous story [← The Voluntary VAT Advantage: Why Registering Below the Threshold Can Boost Profits](https://www.linkupaccounts.co.uk/blog/voluntary-vat-registering-below-threshold-profits) Next story [Property Development Company →](https://www.linkupaccounts.co.uk/blog/property-development-company) ## You May Also Like These Related Stories [How To Identify Tax-Deductible Expenses Limited Companies Often Overlook](https://www.linkupaccounts.co.uk/blog/tax-deductible-expenses-limited-company-guide) ![Three Limited company directors stood over a table, with documents, a calculator, laptop and pens. They are discussing tax-deductible expenses in their limited company.](https://www.linkupaccounts.co.uk/hubfs/group-of-confident-business-people-point-to-graphs-2026-01-08-05-41-50-utc.jpg) [limited-company](https://www.linkupaccounts.co.uk/blog/tag/limited-company) ### How To Identify Tax-Deductible Expenses Limited Companies Often Overlook Sep 10, 2026, 11:00:01 AM 3 min read [Benefits Of Paying Corporation Tax Early](https://www.linkupaccounts.co.uk/blog/benefits-of-paying-corporation-tax-early) ![A businesswoman reviewing financial reports and calculating corporation tax payments in an office environment.](https://www.linkupaccounts.co.uk/hubfs/Link%20Up%20Blog%201.png) [Accounting](https://www.linkupaccounts.co.uk/blog/tag/accounting) ### Benefits Of Paying Corporation Tax Early May 14, 2026, 11:00:00 AM 3 min read [Commercial Tax Mitigation: Using Corporate Pension Contributions To Lower Business Profits](https://www.linkupaccounts.co.uk/blog/pension-contributions-for-corporation-tax-relief) ![Individual in a suit holding a red arrow pointed up, this is above wooden blocks that read out the word ‘pension’. This image portrays how you can use pension contributions for corporation tax relief.](https://www.linkupaccounts.co.uk/hubfs/commercial-tax-mitigation-using-corporate-pension-contributions-to-lower-business-profits.jpg) [Tax Advice UK](https://www.linkupaccounts.co.uk/blog/tag/tax-advice-uk) ### Commercial Tax Mitigation: Using Corporate Pension Contributions To Lower Business Profits Aug 6, 2026, 11:00:02 AM 3 min read ### Get Email Notifications [![Link Up Accounts](https://www.linkupaccounts.co.uk/hs-fs/hubfs/Images/link-up-logo.webp?width=300&height=75&name=link-up-logo.webp "Link Up Accounts")](https://www.linkupaccounts.co.uk/) Services - [Accounting](https://www.linkupaccounts.co.uk/accountants-for-limited-companies) - [Tax Advice](https://www.linkupaccounts.co.uk/business-tax-advice) - [Financial Management](https://www.linkupaccounts.co.uk/financial-management) How We Help - [Outside IR35](https://www.linkupaccounts.co.uk/outside-ir35-accountant) - [Tax Optimisation](https://www.linkupaccounts.co.uk/tax-optimisation) - [Ltd Companies Dividends](https://www.linkupaccounts.co.uk/limited-company-tax-dividends) - [Limited Companies](https://www.linkupaccounts.co.uk/switching-from-umbrella-to-limited-company) - [Benefits of Using a Proactive Accountant](https://www.linkupaccounts.co.uk/complete-accounting-solutions) Resources - [About Us](https://www.linkupaccounts.co.uk/accountancy-and-tax-services) - [Book A Consultation](https://www.linkupaccounts.co.uk/book-a-consultation) - [Health Check](https://www.linkupaccounts.co.uk/financial-health-check) - [Blog](https://www.linkupaccounts.co.uk/blog) - [Contact Us](https://www.linkupaccounts.co.uk/contact-us) Copyright © 2026 Link Up Accounts - [Terms](https://www.linkupaccounts.co.uk/terms-conditions) - [Privacy](https://www.linkupaccounts.co.uk/privacy-policy) - [Cookies](https://www.linkupaccounts.co.uk/cookie-policy) ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Link Up Accounts", "url" : "https://www.linkupaccounts.co.uk/blog/author/link-up-accounts" }, "dateModified" : "2026-07-09T10:00:00.974Z", "datePublished" : "2026-07-09T10:00:00.000Z", "headline" : "Capital Gains Tax Vs Corporation Tax: What's The Difference?", "image" : [ "https://www.linkupaccounts.co.uk/hubfs/LinkUp%20Blog%201.jpg" ], "mainEntityOfPage" : { "@id" : "https://www.linkupaccounts.co.uk/blog/capital-gains-tax-vs-corporation-tax", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://www.linkupaccounts.co.uk/hubfs/Link%20Up%20Accounts%20-%20PNG%20-%20Colour.png" } } } ``` ```json { "@context" : "https://schema.org", "@type" : "WebPage", "description" : "Learn the difference between capital gains tax vs corporation tax and how each affects business profits, tax liabilities and financial planning.", "inLanguage" : "en-GB", "name" : "Capital Gains Tax Vs Corporation Tax: What's The Difference?", "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://www.linkupaccounts.co.uk/hs-fs/hubfs/Images/link-up-logo.webp" }, "name" : "Link Up Accounts", "url" : "https://www.linkupaccounts.co.uk/" }, "url" : "https://www.linkupaccounts.co.uk/blog/capital-gains-tax-vs-corporation-tax" } ``` ```json { "@context" : "https://schema.org", "@type" : "BreadcrumbList", "itemListElement" : [ { "@type" : "ListItem", "item" : "https://www.linkupaccounts.co.uk/", "name" : "Home", "position" : 1 }, { "@type" : "ListItem", "item" : "https://www.linkupaccounts.co.uk/blog/capital-gains-tax-vs-corporation-tax", "name" : "Corporation Tax vs Capital Gains Tax: How Do They Impact Profits?", "position" : 2 } ] } ```