Capital Gains Tax

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Capital Gains Tax can apply to individuals and businesses. It is a tax on the gain (in other words, the profit) you make, if an asset you dispose of has increased in value since you acquired it.

The sort of assets a business may have that would be covered by this include:

  • land and buildings
  • fixtures and fittings such as equipment
  • plant and machinery
  • shares
  • trademarks
  • your business’s reputation

Capital Gains Tax is only payable when you dispose of part or all of that asset, for example, selling, transferring or exchanging it.

There are situations where you can get tax relief which may reduce or delay the Capital Gains Tax you need to pay, for example:

  • there may be a lower rate for sole traders, business partners or those with shares in a ‘personal company’ when they sell the business
  • replacing an asset you've disposed of may delay payment of Capital Gains Tax
  • if you give away a business, the person gifted the business will pay tax when they sell it

You must keep records of any purchase or disposal of assets as well as any costs associated with the asset to support your tax return.

If your gain in a tax year is more than the annual exempt amount, you must report this to HMRC. If you haven't received a tax return, you will need to request one.

Capital Gains Tax can be a complex area. The government website provides guidance on Capital Gains Tax for businesses and you may need expert advice from your accountant.


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