How much tax does a limited company pay when it sells a property?

In England, a limited-company property sale is usually a Corporation Tax question, not a personal Capital Gains Tax question. The Corporation Tax points are UK-wide, including Northern Ireland; the personal income-tax comparison differs for Scotland.

Do limited companies pay capital gains tax when they sell a property?

Limited companies do not usually pay Capital Gains Tax when they sell a property; a company-owned rental property disposal is taxed through Corporation Tax on the company’s chargeable gain instead. The statutory rule is that “Capital gains tax is not charged on gains accruing to a company in respect of which the company is chargeable to corporation tax, or would be so chargeable but for an exemption,” and GOV.UK puts the same point more practically: “Your limited company usually pays Corporation Tax on the profit (‘chargeable gain’) from selling or disposing of an asset.” This is completely different from selling personally: the company has no CGT annual exempt amount, because HMRC says “Companies are not entitled to an annual exempt amount,” and the gain is included with the company’s other taxable profits for the accounting period. So when a company owns the rental and wants to sell it, the company calculates a chargeable gain and pays Corporation Tax, not personal CGT.

How much corporation tax does a company pay on a property sale?

A company property sale is taxed at Corporation Tax rates on the gain, with 19% below the small-profits limit, 25% at the main rate, and an effective 26.5% marginal rate on profits between £50,000 and £250,000 where marginal relief applies. The statutory rates for financial year 2026 are 25% main rate — “The main rate of corporation tax for that year is 25%” — and 19% small profits rate — “the standard small profits rate is 19%.” The sharp point many flat “19% or 25%” summaries miss is that marginal relief claws back the benefit of the 19% rate between the limits, so the extra profit in that band is commonly costed at 26.5%, not 25%. There is no special UK property-company Corporation Tax rate: the gain is added into taxable total profits, and the company’s total profits, associated companies and reliefs decide the bill. Northern Ireland is included in the UK Corporation Tax regime because the separate NI rate power has not been commenced.

Is corporation tax calculated on turnover or profit?

Corporation Tax is calculated on profit, not turnover, and for a company that profit includes income and chargeable gains. The Corporation Tax Act says tax is charged “on the full amount of profits arising in the accounting period,” and separately defines profits as “income and chargeable gains,” so a company is not taxed just because money passed through the bank. For a rental company, that means rent received is not the taxable figure by itself: allowable expenses, finance costs where deductible, and other adjustments matter before the taxable profit is reached. For a property sale, the taxable amount is likewise the gain, not the sale price; HMRC’s public wording is that “The amount you pay depends on how much profit you make.” Abodient can track rent due against rent received, arrears, yield and the figures a landlord needs for a tax return, which matters here because turnover and taxable profit are not the same number.

Is corporation tax on rental profit lower than the income tax you were paying personally?

Corporation Tax is lower than personal higher-rate income tax only while the rental profit stays inside the company; if a higher-rate landlord extracts it as a dividend, 19% Corporation Tax plus 35.75% dividend tax is about 48% combined, which is more than 40% personal income tax. For 2026/27, the company rates are 19% small-profits rate and 25% main rate, while England, Wales and Northern Ireland income-tax rates include “the higher rate is 40%” and “the additional rate is 45%.” That makes incorporation attractive for landlords who reinvest profits, repay debt or build deposits inside the company, and less attractive where the owner needs the rent as personal income each year. The comparison is also distorted by mortgage interest: individual landlords cannot deduct dwelling-related loan costs in calculating income-tax property profits, while HMRC says those finance-cost restriction rules “do not apply to CT customers.” In Scotland, 2026/27 higher and top rates are 42% and 48%; from April 2027, separate property income-tax rates of 22%, 42% and 47% apply to England, Wales and Northern Ireland.

Last reviewed August 2026.

Sources

• Corporation Tax Act 2009 s.4 — “Capital gains tax is not charged on gains accruing to a company in respect of which the company is chargeable to corporation tax, or would be so chargeable but for an exemption.” Source
• GOV.UK, Tax when your company sells assets — “Your limited company usually pays Corporation Tax on the profit (‘chargeable gain’) from selling or disposing of an asset.” Source
• HMRC Capital Gains Manual CG10247 — “Companies are not entitled to an annual exempt amount.” Source
• HMRC Capital Gains Manual CG10247 — “A company's chargeable gains less allowable losses are included in its total profits for an accounting period and charged to Corporation Tax.” Source
• Corporation Tax Act 2010 s.4 — “Add to the result of Step 1 any amount to be included in respect of chargeable gains in the company's total profits of the accounting period (see section 8 of TCGA 1992) after any reduction required to give effect to relief from tax.” Source
• Finance Act 2025 s.13 — “The main rate of corporation tax for that year is 25%.” Source
• Finance Act 2025 s.14 — “(a)the standard small profits rate is 19%, and” Source
• GOV.UK, Northern Ireland Corporation Tax regime draft guidance — “The government will commence the Act and devolution of the power can be completed once a restored Northern Ireland Executive demonstrates its finances are on a sustainable footing.” Source
• Corporation Tax Act 2009 s.8 — “Corporation tax which is assessed and charged for an accounting period of a company is assessed and charged on the full amount of profits arising in the accounting period.” Source
• Corporation Tax Act 2009 s.2 — “In this Part ‘profits’ means income and chargeable gains, except in so far as the context otherwise requires.” Source
• GOV.UK, Corporation Tax — “The amount you pay depends on how much profit you make.” Source
• HMRC Tax Confident, Corporation Tax — “It’ll pay Corporation Tax on that £15,000.” Source
• Finance Act 2026 s.2 — “(a)the basic rate is 20%,” Source
• Finance Act 2026 s.2 — “(b)the higher rate is 40%, and” Source
• Finance Act 2026 s.2 — “(c)the additional rate is 45%.” Source
• Income Tax Act 2007 s.11A — “Income tax is charged at Scottish rates on the non-savings income of a Scottish taxpayer.” Source
• Scottish Government, Scottish Rate Resolution 2026-2027 — “(d) a higher rate of 42%, charged on income above £31,092 and up to a limit of £62,430,” Source
• Scottish Government, Scottish Rate Resolution 2026-2027 — “(f) a top rate of 48%, charged on income above £125,140.” Source
• HMRC technical note, changes to tax rates for property, savings and dividend income — “The separate rates of tax on property income will apply to England, Wales and Northern Ireland.” Source
• Finance Act 2026 s.7 — “(a)the property basic rate is 22%,” Source
• Income Tax (Trading and Other Income) Act 2005 s.272A — “In calculating the profits of a property business for income tax purposes for the tax year 2020-21 or any subsequent tax year, no deduction is allowed for costs of a dwelling-related loan.” Source
• HMRC Property Income Manual PIM1005 — “The finance cost restriction rules introduced for tax years 2017-18 onwards on dwelling related loans do not apply to CT customers” Source
• Finance Act 2026 s.4 — “(b)in subsection (2) (the dividend upper rate), for ‘33.75%’ substitute ‘35.75%’.” Source
• Landlord Resource, limited company vs own name — “Roughly 48% gone, against the 40% the same landlord pays on rental profit held personally.” Source