Free tool
Chargeable gains calculator for companies (with indexation)
A company pays Corporation Tax on the gain when it sells property or shares: the sale price less costs, less an indexation allowance for inflation up to December 2017. Indexation can reduce a gain to nil, but it cannot create or increase a loss.
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Example
Worked example
What the company sold: land buildings; Date bought: 1 June 2008; Purchase price: £250,000; Date sold: 30 June 2026; Sale price: £420,000. Enter your own details to replace this example.
A property bought on 1 June 2008 for £250,000 and sold on 30 June 2026 for £420,000 makes a gain of £170,000 before indexation. Indexation allowance, frozen at December 2017 (factor 0.283), is £70,750, so the company's chargeable gain is £99,250. At 25% Corporation Tax that is about £24,812.50 (£18,857.50 at 19%).
- Sale price
- £420,000
- Less purchase price and buying costs
- £250,000
- Gain before indexation
- £170,000
- Indexation factor for June 2008 (RPI 216.8 to 278.1 in December 2017)
- 0.283
- Indexation allowance
- £70,750
- Chargeable gain
- £99,250
- Illustration: Corporation Tax at 25%
- £24,812.50
- Illustration: Corporation Tax at 19%
- £18,857.50
How the indexation allowance works out
| Cost | Amount | RPI then | RPI at sale (frozen at December 2017) | Factor (3 decimal places) | Indexed rise |
|---|---|---|---|---|---|
| Purchase and buying costs June 2008 | £250,000 | 216.8 | 278.1 December 2017 | 0.283 | £70,750 |
- Gain before indexation
- £170,000
- Indexation allowance worked out
- £70,750
- Indexation allowance given
- £70,750
- Chargeable gain
- £99,250
- Indexation factor = (RPI for December 2017, or the month of sale if earlier, minus RPI for the month the money was spent) divided by RPI for that month, rounded to 3 decimal places. Each factor is applied to its own cost, including any improvement.
- Indexation stopped at December 2017 (TCGA 1992 s.54, FA 2018 s.26).
- It assumes a straightforward sale of the whole asset in the UK, in pounds, to someone not connected with the company, with the full price fixed at the sale, no relief claimed (such as rollover relief) and the asset not received from a group company.
- For land and buildings it also assumes the company sold its whole interest, any lease had more than 50 years left, and, if the sale makes a loss, no capital allowances were claimed on the building or its fixtures (they would restrict the loss).
- The tax figures are an illustration: the rate depends on the company's total taxable profits (19% up to £50,000, 25% over £250,000, marginal relief in between). Taxley's Corporation Tax calculator works out the full bill: https://taxley.co.uk/corporation-tax-calculator.
- Not covered: shares bought at different times (share pooling), the substantial shareholding exemption, rollover relief, part disposals, assets owned since before 1987 (including March 1982 rebasing), other kinds of asset, and property bought to sell as trading stock.
Sources: GOV.UK: Work out a chargeable gain (Corporation Tax when you sell business assets) GOV.UK: Indexation allowance – December 2017 legislation.gov.uk: TCGA 1992 s.53 (indexation allowance can't create or increase a loss) legislation.gov.uk: TCGA 1992 s.54 (calculation of indexation allowance)
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How do I work out a company's chargeable gain?
Start with the sale price and take off the selling costs, the purchase price, the buying costs and the cost of any improvements. That is the gain before indexation. Then take off indexation allowance for the time the company owned the asset up to December 2017. What is left is the chargeable gain.
A company pays Corporation Tax on the gain, not Capital Gains Tax: the gain is added to its other profits for the accounting period. For example, a property bought on 1 June 2008 for £250,000 and sold on 30 June 2026 for £420,000 makes a gain of £170,000 before indexation. Indexation allowance of £70,750 leaves a chargeable gain of £99,250. GOV.UK: Work out a chargeable gain.
What is indexation allowance?
Indexation allowance stops a company paying tax on gains caused only by inflation. Each cost is multiplied by a factor based on the Retail Prices Index (RPI): the rise from the month the money was spent to the month of sale, or December 2017 if earlier, rounded to 3 decimal places.
The RPI was 216.8 in June 2008 and 278.1 in December 2017, so the factor for June 2008 is (278.1 − 216.8) ÷ 216.8 = 0.283, the figure in HMRC's published table. On a £250,000 cost that is £70,750. GOV.UK: Indexation allowance – December 2017 · TCGA 1992 s.54.
Why does indexation stop at December 2017?
From 1 January 2018, indexation allowance for companies was frozen. It is still given for the period a company owned an asset up to December 2017, using that month's RPI of 278.1, but nothing is added for later months, and costs paid on or after 1 January 2018 get no indexation at all.
So an asset bought in 2019 and sold in 2026 has no indexation allowance: the chargeable gain is simply the sale price less the costs. TCGA 1992 s.54(1B).
Why can't indexation create a loss?
The law lets indexation allowance reduce a gain, but not below nil. If the allowance is bigger than the gain before indexation, it is cut back so the result is no gain and no loss. If the sale already makes a loss, no indexation is given, so it cannot make the loss bigger.
A company's capital loss can only be set against chargeable gains, in the same accounting period or later ones. It can't be set against trading profits or carried back. TCGA 1992 s.53.
How are improvements and buying costs treated?
Buying costs, such as legal fees and Stamp Duty Land Tax, are added to the purchase price and indexed from the month of purchase. A capital improvement, such as an extension, is deducted too and gets its own indexation factor from the month it was paid for. Repairs and maintenance are not part of the cost.
Selling costs, such as agent and legal fees, come off the sale price but are not indexed. If the company claimed the structures and buildings allowance on the building, the amount claimed is added to the sale price. TCGA 1992 s.38.
What doesn't this calculator cover?
It covers a UK company selling UK land or buildings, or shares it bought in one purchase and sold all at once. It doesn't cover shares bought at different times, the substantial shareholding exemption, rollover relief, part disposals, assets owned since before 1987 or property bought as trading stock.
If the company held at least 10% of a trading company for 12 months in the 6 years before selling the shares, the gain is usually exempt under the substantial shareholding exemption. The tax shown is an illustration at 25% and 19%; the actual rate depends on the company's total profits. GOV.UK: Corporation Tax rates.
To see the effect on the whole bill, use the Corporation Tax calculator. Our guide explains how a limited company is taxed when it sells property. Bought equipment or a van? Try the capital allowances calculator.
Which rules does this calculator follow?
Every figure comes from the rules HMRC and Companies House publish on GOV.UK, and from the legislation behind them. The links below go to the pages we checked when we last reviewed this calculator, so you can read each rule in full and check that it applies to your company.
- GOV.UK: Work out a chargeable gain (Corporation Tax when you sell business assets)
- GOV.UK: Indexation allowance – December 2017
- legislation.gov.uk: TCGA 1992 s.53 (indexation allowance can't create or increase a loss)
- legislation.gov.uk: TCGA 1992 s.54 (calculation of indexation allowance)
Frequently asked questions
Do companies pay Capital Gains Tax?
No. A UK company pays Corporation Tax on its chargeable gains, not Capital Gains Tax. The gain is added to its other profits for the accounting period and taxed at the company's Corporation Tax rate: 19% if its profits are £50,000 or less, 25% above £250,000, and marginal relief in between, for financial years from 1 April 2023.
Is indexation allowance still available for companies?
Yes, but it is frozen. Companies still get indexation allowance on costs paid before 2018, worked out with the Retail Prices Index up to December 2017, when it was 278.1. Nothing is added for inflation after that month, and costs paid on or after 1 January 2018 get no indexation at all.
How is the indexation factor worked out?
For land and buildings, each factor is the RPI for the month of sale, or December 2017 if earlier, minus the RPI for the month the money was spent, divided by the RPI for that month. It is rounded to the nearest third decimal place, so June 2008 gives 0.283. Shares use an unrounded figure instead.
Can a capital loss be set against trading profits?
No. A company's allowable capital loss can only be set against its chargeable gains, in the same accounting period or carried forward to later ones. It can't be set against trading profits or carried back to an earlier period. Indexation allowance can't create a capital loss or make one bigger.
What costs can a company deduct from the sale price?
The purchase price, the costs of buying (such as legal fees, surveys and Stamp Duty Land Tax), the cost of improvements still there when the asset is sold, and the costs of selling (such as agent and legal fees). Repairs and maintenance are not part of the cost. Indexation applies to the purchase and improvement costs, not the selling costs.
Related free tools
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Last reviewed . This calculator gives general guidance, not tax advice.
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