A limited company usually pays Corporation Tax on the profit, known as a chargeable gain, when it sells or otherwise disposes of a business asset.

Business assets can include land and property, equipment & machinery and shares. The rules also apply to most unincorporated associations and foreign companies with a UK branch or office. Sole traders and business partners usually pay Capital Gains Tax instead when they sell business assets.

To calculate a chargeable gain, companies normally deduct the amount originally paid for an asset from its sale proceeds. Certain costs associated with buying, selling or improving the asset, such as legal fees and Stamp Duty, can also be deducted. Market value may need to be used where an asset is given away or sold for less than its market value in order to benefit the buyer.

For assets acquired before December 2017, companies can usually use the Indexation Allowance to reduce the gain for inflation up to December 2017. The allowance does not apply to disposals after December 2017 for the period after that date.

Capital losses can generally be deducted from chargeable gains but cannot be used to reduce trading income or other profits. Losses may also be restricted where capital allowances have been claimed. Different rules apply to intangible assets such as intellectual property and goodwill. 

Source:HM Revenue & Customs | 28-09-2026
Categories: Corporation Tax

by Admin

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