When you sell a commercial property in the UK, you’ll need to pay Capital Gains Tax (CGT) on any profit you make. This tax applies to the gain or profit from the sale, not the entire sale price.
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What Tax Do I Pay When I Sell a Commercial Property in UK?
Understanding the tax implications of selling commercial property is essential for maximising your returns.
Capital Gains Tax (CGT)
CGT is the primary tax you’ll encounter when selling commercial property. The rate depends on your income tax bracket:
- Basic rate taxpayers: 10% on gains
- Higher and additional rate taxpayers: 20% on gains
For example, if you bought a property for £250,000 and sold it for £350,000, you’d pay CGT on the £100,000 profit.
Corporation Tax
If you’re selling commercial property as a company, you’ll pay Corporation Tax instead of CGT. The current rate is 19%, set to decrease to 17% from April 2025.
Inheritance Tax (IHT)
While not directly related to selling, IHT can apply to commercial properties owned at the time of death, typically at a rate of 40%.
Tax Rates Overview
| Tax Type | Rate |
|---|---|
| CGT (Basic Rate) | 10% |
| CGT (Higher Rate) | 20% |
| Corporation Tax | 19% (17% from 2025) |
| Inheritance Tax | 40% |
Tips for Reducing Tax Liability
- Use your annual CGT allowance (currently £12,300)
- Offset losses from other asset sales against your gains
- Consider transferring property into a trust to potentially lower IHT liabilities
Non-UK Residents
Since April 2019, non-UK residents selling UK commercial properties are now liable for CGT.
Business Asset Disposal Relief
If you’re selling your business, including its premises, you might qualify for Business Asset Disposal Relief. This can reduce the CGT rate to 10% on qualifying assets.
VAT Considerations
VAT is not typically charged on the sale of commercial property, unless it’s a new build. However, a seller can opt to charge VAT to recover VAT paid on associated costs.
How is the gain calculated?
The gain is calculated by subtracting the purchase price from the sale price, along with any allowable expenses such as improvement costs or legal fees.
Can I claim tax relief?
You may be eligible for tax relief if the property was used for business purposes. This could reduce or delay the amount of CGT you pay.
What if I’m a property developer?
If your business is buying and selling property, you’ll pay Income Tax (for sole traders or partners) or Corporation Tax (for limited companies) instead of CGT.
Rapid Results for Savvy Sellers
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Find out why landlords prefer selling their commercial property fast, having tried to sell via an agent. Get in touch today to see how we can help.
Selling your commercial property to Property Saviour can offer a seamless transaction process. We provide rapid cash sales and direct communication with experts who can guide you through the process.
Our team at Property Saviour understands the complexities of commercial property sales and can help you navigate the tax implications. We aim to make the selling process as smooth and stress-free as possible.
Don’t hesitate to reach out to Property Saviour for assistance with selling your commercial property. We’re here to ensure you have a hassle-free experience and maximise your returns.
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