Individuals
UK resident individuals are subject to capital gains tax (CGT) on gains realised on the disposal of UK commercial property at 10% or 20%, depending on whether the individual has any basic rate band remaining (after calculating their income for income tax purposes).
Entrepreneur’s relief (ER) – CGT at 10% – is unlikely to apply unless the disposal relates to the withdrawal by the vendor from an associated business that operates from the premises.
CGT may also be payable on the outright disposal of a property and all or part of a lease premium, the remainder being subject to income tax. Special attention will need to be given to payments made by a landlord for a tenant to vacate premises as the cost may not always be deductible.
Companies
Companies pay corporation tax on disposals.
The company may be able to claim indexation allowance on the disposal – see article Indexation Allowance
If a vendor wishes to realise value, it is often more straightforward to dispose of shares – see article Disposal of shares in UK companies owning UK property
Non-residents
Historically, non-residents (individuals, trustees and companies) have not been subject to UK tax on the disposal of commercial property held for investment purposes.
The government has announced that the position will change from April 2019. From this date, all disposals of UK property by non-residents will become subject to CGT, as will disposals of indirect interests in such property. Gains on commercial property and indirect interests in all types of property will be rebased to April 2019, so that only the element of gain accruing from that date is taxable – see article CGT for non-UK residents on UK property