Acquiring and Disposing of Business Assets

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You may have to pay Capital Gains Tax if you make a profit or gain when you dispose of all or part of a Business Asset.  Disposing of an asset might be selling it, giving it away or exchanging it.

If 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 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.

A business asset could be: shares, land, buildings, a business franchise, fixtures and fittings, the goodwill of the business, its good name or reputation.

You usually acquire an asset when you buy it, but you may also have inherited it, received it as a gift or acquired it in some other way. In all cases you'll need to keep records of the original cost, additional costs associated with acquiring it and sometimes records showing the value of the asset on a specific date. If you bought the asset after 31 March 1982, you'll need to keep records showing the original cost of the asset - such as receipts for purchase. If you didn't buy the asset - for example you inherited or were given the asset - you'll need records of the market value.

There are other times when you need to use the market value of the asset on a specific date in your Capital Gains Tax calculations instead of the cost. For example, if you dispose of an asset left to you in a will by a relative who died on 2 February 2012, you would use the market value on 2 February 2012 (the date of death) in place of any actual cost in your calculations.

If you spent money acquiring the asset - such as fees paid for professional advice, Stamp Duty, conveyance fees, valuation fees or other costs of transfer - and you're deducting these in your Capital Gains Tax calculation, you'll need to keep records of these costs. You will need to keep records when you sell or 'dispose of' an asset. If you file your 2011-12 tax return by the filing date, you should normally keep your records until 31 January 2014 - or until 31 January 2018 if you're self-employed or in a partnership.