- UK companies pay Corporation Tax, not Capital Gains Tax, when selling business assets, property, or shares.
- The taxable gain is based on sale proceeds minus allowable costs, with reliefs available to reduce or defer tax.
- VAT treatment depends on the type of sale, with asset sales and business transfers treated differently.
Paying Corporation Tax when selling a business asset applies when a limited company disposes of property, shares, equipment, or intangible assets, and the profit is added to your company’s taxable profits. Selling a business, property, or company asset can trigger a significant tax bill if it is not planned properly.
If you are planning a sale and want to reduce the tax due, getting advice early matters. Our team at Sleek can help you structure the disposal correctly, identify available reliefs, and stay fully compliant with HMRC through our accounting services.
In this guide, you will learn how Corporation Tax works when a company sells assets or part of a business, how gains are calculated in 2026, when VAT may apply, and which reliefs can reduce or defer the tax. This applies whether you are selling business property, shares in another company, or assets as part of a wider business sale.
What counts as a business asset for Corporation Tax purposes?
A business asset is anything your company owns that has value and is used to generate income. When your company sells or disposes of it, HMRC treats the profit as a chargeable gain and taxes it through Corporation Tax.
Business assets usually fall into two main categories.
Tangible business assets
These are physical items owned by the company, including:
- Land and buildings
- Commercial property
- Machinery and equipment
- Company vehicles
- Fixtures and fittings
Selling company property often attracts specific searches, especially around corporation tax on property sale, so valuations and timing matter.
If your company holds property, it is also worth understanding the wider tax implications explained in Buying property through a limited company.
Intangible business assets
These are non-physical assets that still carry value, such as:
- Goodwill
- Trademarks and patents
- Copyrights and licences
- Software and proprietary technology
Both tangible and intangible assets can trigger Corporation Tax when sold, even if the sale forms part of selling a wider business operation.
How are intangible assets like goodwill taxed?
Intangible assets follow different tax rules depending on when your company acquired them. This distinction directly affects how the profit is taxed.
Assets acquired on or after 1 April 2002 usually fall under the Intangible Fixed Assets regime. Profits are treated as trading income and taxed through Corporation Tax.
Assets acquired before 1 April 2002 may still be taxed under the chargeable gains system instead.
Keeping clear purchase records and professional valuations helps confirm which regime applies and reduces the risk of HMRC challenges later.
Many companies focus on the sale price and overlook allowable costs and reliefs until it is too late. Reviewing legal fees, improvement costs, and potential reliefs before you sell helps reduce Corporation Tax and avoids rushed calculations after completion.
How do you calculate Corporation Tax when selling a business asset?
Corporation Tax applies to the gain made on the sale, not the total sale price. The gain reflects the true profit after costs and reliefs.
Step-by-step calculation
Step 1: Work out the sale proceeds
Start with the amount your company receives. If the asset is sold below market value or gifted, HMRC uses the open market value instead.
Step 2: Deduct allowable costs
You can subtract costs directly related to buying, improving, or selling the asset, including:
- Original purchase price
- Legal and professional fees
- Stamp Duty or Land Tax
- Selling agent or advertising fees
- Capital improvement costs
Routine repairs and maintenance are not deductible unless they add long-term value.
Step 3: Apply any available reliefs
Reliefs such as rollover relief or share exemptions may reduce or defer the gain. Timing matters, so eligibility should be checked before completion.
Step 4: Calculate the chargeable gain
The remaining amount is added to your company’s profits and taxed at the relevant Corporation Tax rate.
Simple example
Item | Amount (£) |
Sale price | 80,000 |
Purchase cost | 60,000 |
Legal and selling costs | 3,000 |
Chargeable gain | 17,000 |
Corporation Tax at 25% | 4,250 |
To check how current rates apply to your business, see What is the Corporation Tax rate?.
What tax reliefs can reduce Corporation Tax when selling assets?
Not every asset sale results in a full tax bill. Several reliefs can reduce, defer, or remove Corporation Tax when selling business assets.
Business Asset Rollover Relief
This relief allows your company to defer tax if you reinvest the sale proceeds into a new qualifying asset.
- The new asset must be bought within three years of the sale.
- The deferred tax becomes payable when the new asset is sold.
- Commonly used for property, machinery, and equipment upgrades.
Substantial Shareholding Exemption (SSE)
If your company sells shares in another trading company, the gain may be fully exempt from Corporation Tax.
To qualify:
- Your company must have owned at least 10% of the shares.
- Ownership must last at least 12 months within the past six years.
- Both companies must be trading or part of a trading group.
This exemption is particularly relevant when selling subsidiaries or restructuring groups, as explained further in Trading vs non-trading for Corporation Tax.
Indexation allowance
For assets acquired before January 2018, indexation allowance may still apply. This adjusts the base cost for inflation up to December 2017, reducing the taxable gain.
Capital losses
If your company sells an asset at a loss, that loss can be carried forward and offset against future chargeable gains. Losses must be properly reported in your CT600 return.
Is VAT charged when selling business assets or a business?
VAT treatment depends on what is being sold and how the transaction is structured. This is an area where many companies make costly mistakes.
Asset sale vs business sale
Type of sale | VAT position |
Sale of individual assets | VAT may apply at the standard rate |
Sale of a whole business | May qualify as a TOGC |
Sale of shares | Outside the scope of VAT |
A Transfer of a Going Concern (TOGC) allows a business to be sold without charging VAT, provided strict conditions are met. This is common when selling a trading business rather than isolated assets.
If your company is VAT registered, you should also review how disposals interact with your wider VAT position, including registration thresholds and reporting.
When do you need to report and pay Corporation Tax after a sale?
Once an asset is sold, the gain must be reported in the accounting period in which the disposal occurred.
Reporting requirements
- Include the gain or loss in your CT600 return.
- File the return through HMRC online services.
- Keep supporting documents such as contracts, valuations, and calculations.
HMRC can request records for up to six years after submission.
Payment deadlines
Company size | When to pay |
Small and medium companies | 9 months and 1 day after period end |
Large companies | Quarterly instalments |
Missing deadlines can trigger interest and penalties, so aligning disposals with cash flow is essential. Practical steps are covered in How to pay Corporation Tax.
How Sleek helps you reduce Corporation Tax when selling assets
Selling a business asset can unlock capital for growth, but poor planning often leads to unnecessary tax. The right structure and timing can make a significant difference to the final bill.
Sleek helps you:
- Review upcoming asset or business sales before they complete.
- Identify reliefs such as rollover relief or share exemptions.
- Assess VAT treatment to avoid unexpected charges.
- Prepare accurate CT600 filings and meet payment deadlines.
With expert support, you can sell assets confidently, stay compliant, and ensure your company pays only what is legally required.
Disclaimer: The preceding information is not legal advice. This content is aimed to provide general guidance. For more formal or legal advice, contact Sleek directly.
450,000
businesses worldwide.
from 4,100+ reviews.
satisfaction rate from
16,000 surveyed clients.
FAQs on paying Corporation Tax when selling a business or asset
Do companies pay Corporation Tax or Capital Gains Tax when selling a business?
Limited companies do not pay Capital Gains Tax. When a company sells a business, property, or assets, any profit is treated as a chargeable gain and taxed through Corporation Tax. Capital Gains Tax applies to individuals, such as shareholders selling shares personally, not to the company itself.
Is there tax when selling a business through a limited company?
Yes. When a limited company sells part or all of a business, the profit on assets sold is subject to Corporation Tax. This includes property, goodwill, equipment, and intellectual property. The exact tax depends on the gain made, available reliefs, and whether the sale is structured as an asset sale or share sale.
How is the gain calculated when selling a business asset?
The gain is calculated by taking the sale proceeds and subtracting allowable costs. These include the original purchase price, legal and professional fees, and qualifying improvement costs. The remaining amount is added to your company’s profits and taxed at the applicable Corporation Tax rate for that accounting period.
What happens if my company sells shares in another business?
If your company sells shares in another company, the gain may qualify for the Substantial Shareholding Exemption. If the conditions are met, the gain can be fully exempt from Corporation Tax. This commonly applies when selling subsidiaries or restructuring groups, provided both companies meet trading requirements.
Is VAT charged when selling business assets or a whole business?
VAT treatment depends on how the sale is structured. Selling individual assets often attracts VAT at the standard rate. Selling a whole business may qualify as a Transfer of a Going Concern, meaning no VAT is charged. Share sales are usually outside the scope of VAT altogether.
View more
Can I use losses from one asset sale to offset another?
Yes. If your company makes a loss on the sale of an asset, that capital loss can be used to offset gains from other disposals. Unused losses can be carried forward indefinitely, as long as they are correctly reported in your Corporation Tax return and supporting records are kept.
When do I have to pay Corporation Tax on asset or business sales?
The gain must be reported in the accounting period in which the sale takes place. Most small and medium companies must pay Corporation Tax within nine months and one day after the end of that period. Large companies usually pay in quarterly instalments, depending on their profit level.
