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IntroductionYou may have to pay Capital Gains Tax if you make a

profit or gain when you dispose of all or part a business asset. Disposing of an asset might be selling it, giving it away or exchanging it.

A business asset could beSharesLandBuildingsA business franchiseFixtures and fittingsThe goodwill of the business - its good name or reputation

IntroductionIf you own your own business, or you're a

partner, you usually report capital gains and losses on your Self Assessment tax return.

It's different if your business is carried on by a limited company, in which you may be a director or shareholder. Any profits on assets disposed of form part of the total profits of the company on which it pays Corporation Tax.

What is Capital Gains Tax?Capital Gains Tax is a tax on the profit or gain

you make when you sell or ‘dispose of’ an asset.

You usually dispose of an asset when you no longer own it, for example if youSell itGive it away as a giftTransfer it to someone elseExchange it for something else

What is Capital Gains Tax?In some cases you're treated as if you've disposed

of an asset. For example a business asset has been destroyed and you've received an insurance payout, or other compensation.

Capital Gains tax is due on the profit you make, not on the amount of money you receive for the asset.

Typical business assetsAssets that are related to trading or to your business in

some way are business assets. They are owned by you or by the business partnership.

They include all forms of:Land and buildings used as business premises, for example a

shop, factory or workshopFixtures and fittings, for example shelves or a counter in a shopPlant and machinery, for example a computer or a diggerGoodwill, for example the good name or reputation of a business

that it's built up over the years it's been operating (this can have a financial value)

Shares, for example in a personal companyRegistered trade marks

Working out Capital Gains TaxIn straightforward cases you need to:

Look separately at each asset disposed of that's liable to Capital Gains Tax and work out each gain or loss

Add together the gains and take away any losses

Deduct your tax-free allowance (known as the Annual Exempt Amount) that's due

Work out the tax due on the gains that remain

Reporting a gain or lossYou pay any Capital Gains Tax through the Self

Assessment system and it is calculated as part of your tax return.

If you haven't received a tax return, but think you need one, you should contact HM Revenue and Customs (HMRC). You may have to pay a penalty if Capital Gains Tax is due and you don't send in a tax return.

If you've made a loss on a disposal, you'll need to claim it in order to set it off against your gains.

PartnershipsWhen you're carrying on a business in partnership, each

of the partners is treated as owning an ‘interest in’ (or a share in) each partnership asset.

You'll need to fill in the Capital Gains summary (form SA108) of the tax return if:The partnership has disposed of an asset during the year for

example it sold its business premisesThere's been a change in the partnership during the year, for

example a new partner joined and you've now got a reduced share in the partnership assets

You left the partnership during the yearYou'll each need to work out the gain or loss arising on your

interest in (or share in) the asset.

Entrepreneurs’ Relief and other tax reliefsIf you own your business, or you're a partner, you

may be able to claim tax relief on business assets you sell or dispose of.

Reliefs that are available include:Entrepreneurs' ReliefBusiness Asset Roll-Over ReliefIncorporation ReliefGift Hold-Over Relief

FormalitiesAll the information provided is for informational

purposes only and you should seek specialist personalised advice as required. As such, we accept no liability for the actions taken by the readers of this slideshow.

All information was provided by Business Link and is covered by Crown Copyright.

All information is available as shown below: HMRC (2012) Capital Gains Tax on business assets: the basics.

Available at: http://www.hmrc.gov.uk/cgt/businesses/basics.htm [Accessed: 3rd March 2013]

For more information,Twitter: @JasonCatesSlideShare: slideshare.net/AdrJasonCatesVisit Gov.uk

Information fromHMRC