You’ve probably spent years building up your company, or maybe you just flipped a commercial property for a tidy profit. Then you realize HMRC wants their cut. It’s a gut punch. Most people call it "capital gains," but if you're operating through a limited company, that's technically a misnomer. In the UK, companies don't pay Capital Gains Tax. They pay Corporate Gains Tax UK—which is actually just a specific part of your Corporation Tax bill.
It sounds like a semantic trick. It isn’t.
Because it’s rolled into Corporation Tax, the way you calculate, report, and offset these gains is totally different from how you'd handle a personal investment. If you sell a warehouse or a chunky piece of machinery, you aren't looking at the 10% or 20% CGT rates individuals pay. You’re looking at the main rate of Corporation Tax, which currently sits at 25% for profits over £250,000. That’s a massive jump.
Small companies with profits under £50,000 still enjoy the 19% small profits rate. But if you’re in that "marginal" zone between £50k and £250k, things get messy. You’re hit with a marginal relief calculation that effectively means you're paying a higher rate on every extra pound.
The Basics: What Counts as a Chargeable Gain?
Basically, any "asset" your company owns can trigger a tax bill when you get rid of it. We're talking about real estate, land, shares, and even intangible stuff like goodwill or trademarks.
Say your company bought an office in 2015 for £300,000 and sells it today for £500,000. On the surface, that’s a £200,000 gain. But you don't just write a check for 25% of that. You have to factor in "allowable deductions." These are the costs of buying and selling—think legal fees, stamp duty, and improvements that actually added value to the property (not just fixing a leaky roof).
Indexation allowance used to be the big "hero" here. It adjusted the value for inflation so you weren't taxed on "fake" gains caused by the economy. But HMRC killed that for companies back in December 2017. Now, you can only claim indexation up to that date. If you bought an asset in 2020, you get zero inflation relief. You’re taxed on the raw numerical increase. It’s harsh.
Why the Substantial Shareholdings Exemption (SSE) is a Game Changer
If your company owns shares in another company and sells them, you might pay zero tax. Zero.
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This is the Substantial Shareholdings Exemption. To qualify, your company generally needs to have held at least 10% of the ordinary shares in the other company for at least twelve months. There’s a catch, though. Both companies—the one selling and the one being sold—usually need to be trading companies. If you’re just a shell company holding an investment property, the SSE probably won’t save you.
I’ve seen business owners freak out during an acquisition because they didn't structure the holding correctly from day one. If you hold shares personally, you might get Business Asset Disposal Relief (the old Entrepreneurs' Relief), but that's capped at a £1 million lifetime limit. Through a company using SSE? There is no limit. It’s one of the few genuinely "generous" parts of the corporate gains tax UK framework.
Offsetting Losses: The Silver Lining
If you sell an asset for less than you paid, you’ve got a capital loss. You can’t use that loss to reduce your tax on regular trading income (like the money you make selling widgets). It can only be used against other capital gains.
However, you can carry those losses forward indefinitely.
If 2024 was a disaster and you lost £50,000 on a property sale, but 2026 brings a £60,000 gain on some equipment, you only pay tax on the £10,000 difference. You just have to make sure you actually declare the loss on your Company Tax Return (CT600). Don't just ignore it because there's no tax to pay that year. Document it.
Rollover Relief: Kicking the Can Down the Road
Business Asset Rollover Relief is the ultimate "I'll pay you later" card. If you sell an asset used for your business and buy a new one within a specific timeframe—usually one year before or three years after the sale—you can "defer" the tax.
Imagine you sell your old workshop for a £100,000 profit. If you reinvest that entire £100,000 into a new, better workshop, you don't pay tax now. Instead, the "cost" of your new workshop is reduced by that £100,000 gain.
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- Sell Workshop A for £200k (Gain of £100k).
- Buy Workshop B for £300k.
- Use Rollover Relief.
- Your "tax cost" for Workshop B is now recorded as £200k (£300k minus the £100k gain).
You only pay the tax when you eventually sell Workshop B without buying a replacement. It’s great for cash flow. But remember, the assets must be used in the trade. You can't sell a factory and buy a holiday home in Cornwall and expect HMRC to be cool with it.
The "Double Tax" Trap Most People Ignore
This is where it gets spicy. And by spicy, I mean expensive.
If your company makes a gain of £100,000, it pays £25,000 in Corporation Tax (assuming the 25% rate). That leaves £75,000 in the company bank account. Now, how do you get that money into your personal pocket?
If you take it as a dividend, you pay dividend tax. If you take it as salary, you pay income tax and National Insurance. By the time the money hits your personal savings account, you’ve been taxed twice.
For some people, it’s actually better to own assets personally and rent them to the company. For others, the corporate structure offers better protection and lower initial tax rates. There is no "one size fits all" answer here. You have to run the numbers.
Reporting and Deadlines
You don't pay corporate gains tax UK the moment you sell the asset. It’s handled through your annual Corporation Tax return.
Usually, you have to pay your Corporation Tax 9 months and 1 day after the end of your accounting period. If your company is "large" (profits over £1.5 million), you might have to pay in installments. Don't miss these. The interest rates HMRC charges on late payments have crept up significantly in the last couple of years. It's not the cheap debt it used to be.
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Specific Complications: Intangible Assets
The rules for things like "goodwill" changed in 2015 and 2019. Honestly, it’s a headache. If your company was formed after April 2002, the gains on intangible assets are usually treated as regular trading income rather than capital gains. This means you can't always use capital losses to offset them. If you’re selling a brand name or a patent, you need a specialist to look at the "Corporate Intangibles Regime."
Actionable Next Steps for Business Owners
Stop thinking of your business assets as "savings accounts" and start thinking of them as tax liabilities in waiting. If you're planning a major sale, you need to act months—sometimes years—in advance.
First, check your acquisition dates. If you’ve held an asset since before December 2017, make sure your accountant has calculated the indexation allowance correctly. It’s free money (or rather, a free tax reduction).
Second, look at your "Group" structure. If you have multiple companies, you can often move assets between them at "nil gain/nil loss." This allows you to move an asset to a company that has existing capital losses to offset the eventual gain.
Third, if you’re selling the whole business, weigh up the pros and cons of an "Asset Sale" versus a "Share Sale." Buyers usually prefer asset sales because they can pick and choose what they take and avoid hidden liabilities. Sellers (that’s you) usually prefer share sales because it often triggers the Substantial Shareholdings Exemption or personal Business Asset Disposal Relief, avoiding that double-tax trap I mentioned earlier.
Finally, keep every single receipt. If you spent £20,000 upgrading the electrical system in a commercial unit five years ago, that £20,000 reduces your taxable gain today. If you can’t prove you spent it, HMRC will happily ignore it.
Tax isn't just about what you owe; it's about what you can prove you don't owe.