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bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4956
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can a company who makes a gain on a sale of a property, not

Customer Question

can a company who makes a gain on a sale of a property, not pay tax
Submitted: 4 years ago.
Category: Tax
Expert:  bigduckontax replied 4 years ago.
Hello, I'm Keith and happy to help you with your question. The answer is as long as the proverbial piece of string!

If there is a gain on a property sale it forms part of its trading and goes ultimately into the profit and loss account for the year. A company does not pay Capital Gains tax as such. Thus the tax position depends entirely on the trading position of the company and, indeed, past performance can come into the equation. If overall the company does not make an overall profit in the year of sale then the gain is tax free. If the final profit is lower than the gain then it is effectively part tax free. If there are brought forward tax losses in the company's tax account this may help absorb some of the tax due on trading. So now you see the reason for the rather flippant comment in the second sentence of my answer!

So you see a company can pay no tax on a property gain, it all depends upon the trading position in the trading year the sale is completed.

There is a further possibility. A company may claim Business Asset Roll-Over Relief if it sells a property and then invests in another property. You might like to look at the HMRC advice contained in 'Chargeable gains and Corporation Tax.' Any search engine will direct you there. In such a case the gain would not go into the profit and loss account at all.

I do hope I have been able to throw some light on your question.
Customer: replied 4 years ago.

If the company is going to nock the building down and develop on the land, is there a disposal on market value?

Expert:  bigduckontax replied 4 years ago.
It is not a sale at all in that case, assuming that it is the same company.