Capital Gains Tax for Companies

Corporations pay CGT when they “dispose” of:

  • Land and buildings
  • Fixtures and fittings
  • Plant and machinery
  • Shares
  • Registered trademarks
  • Business’s reputation

In order to determine whether tax needs to be paid companies need to work out gains. The capital gains tax is only paid by sole traders and business partnerships. Other types of companies must pay a corporate tax.

The gain is worked out as a difference between what the business asset was bought for and what the company sold it for. The market value will be used if:

  • you gave it away (there are different rules if it was to your spouse, civil partner or a charity)
  • you sold it for less than it was worth to help the buyer
  • you inherited the asset (and don’t know the Inheritance Tax value)
  • you owned it before April 1982

  • Some of the costs of buying, selling and improving the asset can be deducted from your gain. This includes:
  • fees for valuing or advertising assets
  • costs to improve assets (but not normal repairs)

Stamp Duty Land Tax and VAT (unless you can reclaim the VAT)

Tax Relief

Companies may be able to reduce the amount of capital gains tax to be paid if they are eligible for tax relief:

Relief Description Eligibility
Entrepreneurs Relief Pay 10% Capital Gains Tax on qualifying profits if you sell all or part of your business (instead of the normal rates) For sole traders, business partners or those with shares in a ‘personal company’
Business Asset Rollover Relief Delay paying Capital Gains Tax when you sell or dispose of some types of asset if you replace them Buy the new asset within 3 years of disposing of the old one. Use the old and new assets in your business
Incorporation Relief Delay paying Capital Gains Tax when you transfer your business to a company Transfer all your business and its assets (except cash) in return for shares in the company
Gift Hold-Over Relief Pay no Capital Gains Tax if you give away a business asset - the person you gave it to pays tax when they sell it You used the business asset for trading as a sole trader or partner

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