Capital Gains Tax on the sale of your trading business

Selling your trading business attracts a tax liability of only 10% on the first £5 million of gains that you make regardless of whether you are a basic rate, 40% rate or 50% rate taxpayer. This is claimed on your personal Self Assessment tax return.

The operation has to be a qualifying trading company or the holding company of a trading group. Even so it is believed that if up to around 20% of the business is dealing with ‘non-trading’ business you should still be eligible.

The tax is due by 31 January following the end of the tax year in which you sold up.

Owner managed businesses should find specialist help, particularly where the buyer is another business and is paying for the company partially in cash with the rest in non-cash assets.

Any gain above £5 million is taxed at 28%.

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