Whozoo tips #37 - What taxes should I consider if selling a commercial property?

Published: 08/02/2024

When selling a commercial property in the UK, you may be liable for various taxes. The specific taxes that apply to your situation can depend on factors such as the property's value, your residency status, and any exemptions or reliefs that may be applicable.

Here are some of the key taxes you might encounter:

Capital Gains Tax (CGT):
•This is one of the main taxes you'll need to consider. CGT is a tax on the profit made from selling an asset, and it applies to the gain in value of your commercial property. The rates and allowances for CGT can vary, so it's important to check the latest information. There are also specific reliefs and exemptions that may apply, such as Entrepreneurs' Relief or Business Asset Disposal Relief for qualifying individuals.

Stamp Duty Land Tax (SDLT):
•While SDLT is more commonly associated with residential property transactions, it may also apply to the sale of commercial properties. The rates and thresholds can vary, so it's essential to check the latest SDLT rules.

Value Added Tax (VAT):
•Depending on the circumstances, your commercial property sale may be subject to VAT. If the property is opted to tax, the sale could be subject to the standard rate of VAT. However, some property transactions may be exempt or qualify for the Transfer of a Going Concern (TOGC) relief.

Inheritance Tax (IHT):
•Inheritance Tax is not typically a direct concern for sellers, as it is usually associated with the transfer of assets upon death. However, it's worth considering if the sale is part of a broader estate planning strategy or if the property is being sold as part of an inheritance.

Income Tax:

•If you're selling commercial property as part of your business, any profits may be subject to income tax rather than capital gains tax. This can apply if you're a property developer or trader rather than an investor.It's crucial to seek professional advice from tax specialists or financial advisors to understand your specific tax liabilities and potential reliefs. Tax laws can be complex and subject to change, so staying informed about the latest regulations is essential to ensure compliance and optimize your financial position during a commercial property sale.

When buying a commercial property in the UK, there are several taxes that you may be liable for. The key taxes to consider include:

Stamp Duty Land Tax (SDLT):
•SDLT is a tax on property transactions, and it is applicable to the purchase of commercial properties as well as residential properties. The amount of SDLT you pay depends on the purchase price of the property. There are different rates and thresholds for commercial properties, and you may also qualify for reliefs or exemptions in certain circumstances.        

Value Added Tax (VAT): 
Commercial property transactions may be subject to VAT, depending on whether the property is opted to tax. If the seller has opted to tax and is charging VAT on the sale, you will need to factor this into the purchase price. However, some property transactions may be exempt or qualify for the Transfer of a Going Concern (TOGC) relief.