You may have to pay Capital Gains Tax if you make a profit or gain when you dispose of all or part a business asset. Disposing of an asset might be selling it, giving it away or exchanging it.
A business asset could be
If you own your own business, or you're a partner, you usually report capital gains and losses on your Self Assessment tax return.
It's different if your business is carried on by a limited company, in which you may be a director or shareholder. Any profits on assets disposed of form part of the total profits of the company on which it pays Corporation Tax.
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Capital Gains Tax is a tax on the profit or gain you make when you sell or ‘dispose of’ an asset.
You usually dispose of an asset when you no longer own it, for example if you
In some cases you're treated as if you've disposed of an asset. For example a business asset has been destroyed and you've received an insurance payout, or other compensation.
Capital Gains tax is due on the profit you make, not on the amount of money you receive for the asset.
Assets that are related to trading or to your business in some way are business assets. They are owned by you or by the business partnership.
They include all forms of:
In straightforward cases you need to:
Read the step-by-step guide to find out more.
You pay any Capital Gains Tax through the Self Assessment system and it is calculated as part of your tax return.
If you haven't received a tax return, but think you need one, you should contact HM Revenue and Customs (HMRC). You may have to pay a penalty if Capital Gains Tax is due and you don't send in a tax return.
If you've made a loss on a disposal, you'll need to claim it in order to set it off against your gains.
If you own your own business, you'll usually complete a Self Assessment tax return (form SA100) and the Capital Gains Tax summary (form SA108).
Partners in business partnerships usually need the same forms. Also, the partnership’s tax return should include details of disposals on the Partnership Disposal of Chargeable Assets pages (form SA803).
You must include a calculation of each gain or loss with your tax return.
When you're carrying on a business in partnership, each of the partners is treated as owning an ‘interest in’ (or a share in) each partnership asset.
You'll need to fill in the Capital Gains summary (form SA108) of the tax return if:
You'll each need to work out the gain or loss arising on your interest in (or share in) the asset.
Ann and Barry are equal partners in a business partnership - each have a 50 per cent share in the partnership assets.
They bought their office premises in January 2001 for £100,000.
They sell the office premises in September 2011 for £140,000.
To work out their gain each partner will include purchase costs of £50,000 (£100,000 × 50%) and disposal proceeds of £70,000 (£140,000 × 50%).
Each partner has to include the gain on their tax returns and pay any Capital Gains Tax due.
If you own your business, or you're a partner, you may be able to claim tax relief on business assets you sell or dispose of.
Reliefs that are available include: