As your business grows and changes, you may realise that you no longer need all of the assets that have on your books. How much do you pay in company asset disposal tax?

Selling some of those assets could mean you have spare money to reinvest into your business by updating old tech for the latest models, save for an office move or redevelopment, or use the money to expand your company’s capacity to fulfil orders.

No matter what you do with it, selling expendable assets can be a great way to bring a bit of extra money into your company. But it’s important that you know the true cost of selling.

Company asset disposal tax – What assets are you going to sell?

An asset is anything that belongs to your business. Technically, this can include abstract concepts like your reputation, customer goodwill and intellectual property.

For the purposes of this article through, we’ll be talking about physical assets – from land and properties, to heavy machinery and equipment, to the fixtures and fittings in your office.

Company asset disposal tax – Have you made any money on a sale of an asset?

The money in your hand after the sale may not necessarily mean you’ve made a profit. Work out the difference between what you bought the asset for and how much you made from selling it.

Using that number, you should then deduct all the other costs you incurred selling the asset in the first place.

Before the sale, did you have the asset professionally valued? Or perhaps you had it renovated? You may have had to pay for advertising or for storage until it sold.

Further costs can become payable once your asset is sold. You can take account of delivery costs getting the asset to your customer. If you sold the asset at an auction house, you can also deduct the commission paid to the auctioneer.

Stamp Duty and VAT are also considered costs of sale so you may have to deduct these from your gain too.

Company asset disposal tax – How your gains will be taxed

Gains made on assets sales by limited companies will be added to your overall profits when it’s time to do your Corporation Tax.

If you are a sole trader, you will have to pay Capital Gains Tax on the money you make from your sale. Members of partnerships only have to pay a percentage of the CGT on the sum which is based on their level of shareholding within the company.

Sole traders and partnerships can also apply for Business Asset Rollover Relief when they sell an asset in order to replace it with something new and better.

As long as you buy the replacement within three years of disposing the old one, you are eligible.

This can really help as it gives you time to switch your production over from the old system to the new, giving your business extra capacity during that time.

You could also choose to give away your asset to another person or company for free. If you do, you could be eligible for Gift Hold-Over Relief.

This means that if the person you gifted the asset to comes to sell it themselves, they will have to pay the tax you would have if you’d sold it.

Company asset disposal tax – talk to Burton Beavan

Please call us on 01606 333 900 or email us at hello@burtonbeavan.co.uk to find what works best for your business.