Do UK Companies Pay Capital Gain Tax? Here’s How It Works

If you're running a UK company and planning to sell an asset—like property, shares, or even equipment—you’re probably wondering: Will we need to pay Capital Gains Tax? It's a common question, especially during a sale or end-of-year tax planning.

The short answer? No, companies don’t pay Capital Gains Tax in the same way individuals do. But that doesn’t mean those profits are tax-free. Instead, they’re taxed through Corporation Tax—under a different set of rules.

In this article, we’ll explain how capital gains are taxed for UK companies, what types of gains are included, and how to report them correctly—so you’re not caught off guard when tax season rolls around.

Capital Gains Tax (CGT) applies when individuals make a profit from selling certain assets, including property, shares, and valuable items. For example, a sole trader or a partner in a business partnership might pay CGT when selling business assets.[1]

However, limited companies don’t pay Capital Gains Tax. Instead, when a company sells an asset and makes a profit, that profit is called a chargeable gain and is subject to Corporation Tax.

Since 30 October 2024, CGT rates in the UK have changed. Here's how they apply depending on your income tax band and the type of asset.[2]

For basic rate taxpayers

• 18% on residential property gains
• 24% on other chargeable gains

For higher rate or additional rate taxpayers

• 24% on all gains (including residential property)
• 28% for gains from carried interest (investment fund managers)

Let’s look at the distinction in practice.

A chargeable gain is the profit a company makes when it disposes of an asset.

These gains aren’t taxed through Capital Gains Tax. Instead, they’re added to your company’s total profits and taxed under Corporation Tax, with tax implications based on overall profit levels.

To work out your company’s gain, use the following formula.

Chargeable gain = Sale price – (Original purchase cost + Allowable costs + Capital Improvements)

Good news—you can deduct some costs when working out your gain.

Your company buys a van for GBP 20,000 and sells it for GBP 35,000. You paid GBP 2,000 for a respray and GBP 1,000 in legal costs.

Then your gain is: GBP 35,000 – (GBP 20,000 + GBP 2,000 + GBP 1,000)

= GBP 12,000

This GBP 12,000 is added to your company's profits and taxed under Corporation Tax.

Here are common business assets that may lead to a chargeable gain when sold or transferred:

• Land and buildings
• Machinery and equipment
• Fixtures and fittings
• Shares and securities (excluding ISAs)
• Registered trademarks or intellectual property
• Cryptocurrencies
• Goodwill and customer lists (especially when selling the business)

A disposal isn’t limited to sales. It also includes:

• Gifts (except to a spouse, civil partner, or charity)
• Transfers to another party or entity
• Exchanges (e.g. asset swaps)
• Compensation payments (such as insurance payouts)

Even if no money changes hands, HMRC may still treat the asset as disposed of at market value for tax purposes.

Whether you’re operating as a sole trader or through a limited company, there are reliefs that may reduce or delay the tax on your gains. But which ones apply depends on your business structure.

If you're self-employed or in a business partnership, the following Capital Gains Tax reliefs may apply.

Companies don’t qualify for personal CGT reliefs, but there are some Corporation Tax rules that allow for deferral or exemption.

If you sell your main home, you usually don’t have to pay Capital Gains Tax as long as you haven’t used part of it exclusively for business.

For example, if you’ve been working from a spare room or kitchen table, that’s fine. HMRC makes it clear that using a room as a temporary or occasional office doesn’t count as exclusive use, so you’ll still get full relief.

But if you’ve set up a room purely as a business space with no personal use at all—then CGT might apply to just that part of the property when you sell it.[3]

Once you’ve worked out your gain, the next step is making sure it’s reported and paid correctly.

Capital Gains Tax is usually reported through your Self Assessment tax return, by including the gain in the Capital Gains Summary section (form SA108). You’ll need to report the gain by 31 January following the end of the tax year and pay tax bill by the same deadline.

Alternatively, if you’re a UK resident and your gain is from a non-residential asset, you can report it earlier using HMRC’s real-time Capital Gains Tax service. If you’ve already registered for Self Assessment, the gain must still be included in your return later on.

Companies report chargeable gains as part of their Corporation Tax return (form CT600).

The gain is included in the company’s total profits for the accounting period and taxed at the applicable Corporation Tax rate.

While the deadline for filing is 12 months after the end of your accounting period, tax is usually due within 9 months and 1 day.

Assuming your business structure shields you from Capital Gains Tax could lead to unexpected bills. Whether you're a sole trader or running a company, HMRC expects accurate reporting on asset disposals.

Don’t rely on general tax advice—get clarity before you act.