Selling assets from a self-employed business

All limited companies in the UK need to pay corporation tax on any profit or chargeable gains made via the sale of business assets, which is currently 19% at the time of writing for companies with profits under £50,000, and 25% above this (with marginal relief for those between £50,000 and £250,000).

This is slightly more complicated when it comes to intangible items. If they were created or acquired after 31st March 2002, then the gains will be included in your business income and corporation tax will apply. But if they existed before April 1st, 2002, calculating the gains can be more complicated and require specialist help to make sure the amounts are correct.

If you’re a sole trader or in a partnership then Capital Gains Tax (CGT) is paid on any chargeable gains from selling or disposing of business assets. If you’re currently in the basic rate of income tax bands (up to £50,270 at the time of writing), then CGT will be 10%, but it rises to 20% on any income above the basic rate allowance.

There is a different rate of 18% (basic) and 20% (higher) for residential properties. 

You may be able to reduce the amount payable via a number of measures, including Business Asset Disposal Relief or Business Asset Rollover Relief for sole traders and partnerships, Disincorporation Relief for limited companies, or The Patent Box for patented inventions and related intellectual property.

If you’re making improvements to a business asset outside of regular repairs and maintenance, this can be offset alongside any valuations, advertising, or the actual disposal of physical items.

You may also be eligible for Gift Hold-Over Relief if you’re a sole trader or business partner, or have at least 5% of voting rights in a company, and give away assets. You’ll need to claim jointly with the recipient, at the same time as you provide the gift. Giving away business assets can also entitle the recipient to potentially get Business Relief on Inheritance Tax.