Capital Gains Tax on Commercial Property

When you sell commercial property at a profit, capital gains tax (for individuals) or corporation tax (for companies) is due on the gain. The rates and reliefs differ from residential.

The rates

• Individuals: commercial gains are taxed at 18% within the basic-rate band and 24% above it. These are the main rates; the property-specific residential rates do not apply to commercial.
• Companies: gains are charged to corporation tax at the company's rate, up to 25%.

Reliefs

• Business Asset Disposal Relief (BADR): where it applies, it gives a reduced rate on the first £1 million of qualifying gains across your lifetime. Gains above that cap are taxed at the normal 18%/24%. The BADR rate itself has been rising towards the main rates: 10% up to 5 April 2025, 14% from 6 April 2025, and 18% from 6 April 2026. Availability for a commercial landlord is limited, since letting is usually an investment rather than a trade.
• Rollover relief: defer the gain by reinvesting the proceeds in qualifying business assets.
• Holdover and incorporation relief: can defer a gain on certain transfers, for example on incorporating a business.

Planning points

The gain is the sale price less the base cost and allowable costs. Remember that SBA claimed reduces the base cost (see SBA). Timing a disposal across tax years, using both spouses' allowances and annual exemptions, and considering the holding structure all affect the bill. Take advice before you sell. Compare structures in SPV vs personal ownership.

What CGT rate applies to commercial property?

For individuals, 18% within the basic-rate band and 24% above it. Companies pay corporation tax on gains instead, up to 25%.

Does Business Asset Disposal Relief apply to a commercial landlord?

Rarely, because letting is usually an investment rather than a trade. Where it does apply, it covers the first £1 million of qualifying gains in your lifetime, taxed at 18% from 6 April 2026 (14% from 6 April 2025, and 10% before that). Gains above the £1 million cap are taxed at the normal rates.

Sources

• Capital Gains Tax rates (gov.uk)
• Business Asset Disposal Relief (gov.uk)
• Corporation Tax rates (gov.uk)