Do You Need to Pay Capital Gains Tax When Selling Your Business or Property? (2025/26)

Selling a business or property can be life-changing, but it can also come with a Capital Gains Tax (CGT) bill if not planned properly. Understanding how CGT works can help you reduce what you owe or even eliminate it entirely in some cases.

Tax planning with assets is essential

What is Capital Gains Tax?

CGT is a tax on the profit you make when you sell something that’s increased in value. It’s not the total sale price, only the gain. For example, if you bought a property for £150,000 and sold it for £200,000, the gain is £50,000.

For individuals, the annual CGT-free allowance for 2025/26 is £3,000. Anything above that is taxed at 10% (basic-rate taxpayers) or 20% (higher-rate taxpayers) for most assets. For residential property, the rates are 18% and 28%.

Selling a business

If you sell or close your business, you may qualify for Business Asset Disposal Relief (BADR) (formerly known as Entrepreneurs’ Relief). This special relief reduces the CGT rate to 10% on gains up to £1 million over your lifetime.

To qualify, you must have:

• Owned at least 5% of the shares and voting rights

• Been an officer or employee of the company

• Traded for at least two years before the sale

Selling a rental property

If you sell a property that isn’t your main home, CGT will usually apply. You can reduce the gain by deducting:

• Purchase and sale costs (like legal fees or agent commissions)

• The cost of improvements (but not maintenance or repairs)

If you ever lived in the property, Private Residence Relief may cover part of the gain.

Planning ahead

Timing matters. If you expect to fall into a lower tax bracket next year, or if your spouse has unused allowance, transferring part of the asset before sale can cut the tax bill legally. Couples can also use both their allowances for a combined £6,000 tax-free gain.

The simple takeaway

Whether you’re selling a company or a property, proper planning before signing contracts can save thousands. Always calculate your likely CGT and review whether reliefs like BADR or Private Residence Relief apply, don’t leave it to chance after the sale.

Need help making sense of your taxes? JSC Accounting works with small businesses across the UK to keep things simple and compliant. Get in touch for a friendly chat about how we can help.

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