How long do you have to pay CGT on commercial property?
This question often arises when property owners consider selling their business premises. The answer isn‘t as straightforward as you might think, but don‘t worry – I’ll break it down for you.
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How long do you have to pay CGT on commercial property?
When you sell a commercial property in the UK, you typically have 60 days from the completion date to report and pay any Capital Gains Tax (CGT) owed. This timeframe applies to most property sales, including commercial buildings.
What is Capital Gains Tax on commercial property?
Capital Gains Tax on commercial property is a tax levied on the profit you make when selling a business premises. The amount you pay depends on various factors, including your tax band and how long you’ve owned the property.
Here’s a quick breakdown of CGT rates for commercial property:
- Basic rate taxpayers: 10%
- Higher and additional rate taxpayers: 20%
Remember, these rates apply only to the gain, not the total sale price.
How is CGT calculated on commercial property?
Calculating Capital Gains Tax (CGT) on commercial property for the 2024/2025 tax year in the UK involves a few steps:
- Work out the gain: Sale price – (Purchase price + improvement costs + selling costs)
- Deduct the tax-free allowance (£3,000 for 2024/25)
- Apply the appropriate tax rate to the remaining amount
For higher or additional rate taxpayers, the rate is 20% on gains from commercial property (non-residential).
Here’s an example using specific figures:
| Item | Amount |
|---|---|
| Sale price | £500,000 |
| Purchase price | £300,000 |
| Improvement costs | £50,000 |
| Selling costs | £10,000 |
| Gain | £140,000 |
| Tax-free allowance | £3,000 |
| Taxable gain | £137,000 |
In this scenario, if you’re a higher rate taxpayer, you’d pay 20% of £137,000, which amounts to £27,400 in CGT.It’s worth noting that the tax-free allowance (Annual Exempt Amount) has been significantly reduced compared to previous years. This means that a larger portion of any gains will be subject to tax in the 2024/2025 tax year.
Can you avoid paying CGT on commercial property?
While you can’t completely avoid CGT, there are ways to reduce your liability:
- Use your annual tax-free allowance
- Offset losses from other asset sales
- Claim Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) if eligible
- Reinvest the proceeds into another business property (Business Asset Rollover Relief)
Do I need to pay CGT if I reinvest in another property?
If you reinvest the proceeds from selling a commercial property into another business property, you might be able to claim Business Asset Rollover Relief. This allows you to defer the CGT until you sell the new property.
To qualify, you must buy the new property within three years of selling the old one, or up to one year before.
Tips for managing CGT on commercial property
Here are some useful tips to help you manage your CGT liability:
- Keep detailed records of all costs associated with the property
- Consider spreading the sale over two tax years to use two annual allowances
- Seek professional advice to ensure you’re claiming all eligible reliefs
- Plan ahead – CGT rates and rules can change, so stay informed
What happens if you don’t pay CGT on time?
If you miss the 60-day deadline for reporting and paying CGT on your commercial property sale, you may face penalties:
An initial £100 fine for late filing
Further penalties of £10 per day after 3 months, up to a maximum of £900
Additional penalties for prolonged delays
HMRC also charges interest on late payments, so it’s best to report and pay on time.
Remember, selling a commercial property can have significant tax implications. It’s always wise to consult with a tax professional or accountant to ensure you’re meeting all your obligations and making the most of available reliefs.
Why Choose Property Saviour Over Estate Agents?
Selling your commercial property to Property Saviour offers distinct advantages over traditional estate agents. We provide a swift, hassle-free solution, completing purchases in as little as three weeks compared to the average 12-month selling period through agents. Our process eliminates the uncertainty of buyer withdrawals and the stress of prolonged negotiations.
As genuine cash buyers, we have the funds ready to purchase your property directly, avoiding the complications of mortgages or bridging loans. This means no surveys, no last-minute price reductions, and a guaranteed sale price. We also handle properties with various issues, from structural defects to troublesome tenants, which might deter conventional buyers.
Don’t let your commercial property become a burden. With Property Saviour, you can avoid ongoing costs like business rates, empty property insurance, and utility bills. We offer a straightforward, transparent process and even contribute £1,500 towards your legal fees. Ready to explore a quicker, more certain way to sell your commercial property? Get in touch with us today for a free, no-obligation cash offer and experience the Property Saviour difference.
Sell with certainty & speed
Property Saviour Price Promise
- The price we’ll offer is the price that you will receive with no hidden deductions.
- Be careful with ‘cash buyers’ who require a valuation needed for a mortgage or bridging loan.
- These valuations or surveys result in delays and price reductions later on.
- We are cash buyers. There are no surveys.
- We always provide proof of funds with every formal offer issued.
We'll Pay £1,500 Towards Your Legal Fees
- No long exclusivity agreement to sign because we are the buyers.
- You are welcome to use your own solicitor.
- If you don’t have one, we can ask our solicitors for recommendations.
- We share our solicitor’s details and issue a Memorandum of Sale.
Sell With Certainty & Speed
- Our approach is transparent and ethical, which is why sellers trust us.
- 100% Discretion guaranteed.
- If you have another buyer, you can put us in a contracts race to see who completes first.
- Complete in 10 days or at a timescale that works for you. You are in control.
