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    Sale and Leaseback Agreement Tax Advice

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    AT A GLANCE

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    Sale and Leaseback Agreement Tax Advice

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    Last Updated 12/12/2024

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    AT A GLANCE

    Considering a sale and leaseback agreement in the UK? Our network of tax consultants offers personalised advice to help minimise any tax liabilities. Turn your property into potential – contact us today so your sale and leaseback strategy is compliant and profitable.

    SALE AND LEASEBACK TAX ADVICE YOU CAN TRUST

    If you want to unlock some capital and improve your balance sheet, a sale-leaseback arrangement is a savvy move.

    What is a sale-leaseback?

    A sale-leaseback agreement is when a company sells its property to an investor, leases it back, and then continues to use it.

    It’s a powerful way to unlock your property’s value and keep your business running smoothly. You sell your property, pocket the cash, and keep the space under a long-term lease agreement.

    Why consider a sale-leaseback?

    If your business’s funds are tied up in assets like property or equipment, you may be slowing down your growth.

    A sale-leaseback agreement offers a potential solution by converting these assets into liquid capital.

    Through this capital, you can fuel growth by investing in new products and markets, improve operations through new equipment, and reduce debt.

    It can also be used for any acquisitions that will encourage further growth. Put simply, sale-leaseback agreements help you run your business better without being tied to expensive assets.

    What are the tax implications of a sale-leaseback agreement?

    Before you commit to a sale-leaseback agreement, consider the tax implications that come with it. If you don’t, you’ll quickly learn it’s not a simple matter of sell, lease, profit.

    So, what taxes do you need to consider with a sale-leaseback agreement?

    Capital Gains Tax (CGT)

    When selling commercial property, you’re liable to pay CGT on any profit made, up to 20%.

    However, if the property has been used solely for business purposes, you might be eligible for Business Asset Disposal Relief. This could reduce the CGT rate to 10% on qualifying gains up to a lifetime limit of £1 million.

    Corporation Tax

    The profit from the sale will also likely be subject to Corporation Tax if you don’t use capital allowances and rollover relief to mitigate.

    The main rate of Corporation Tax in the UK is 25% over profits over £250,000.

    Get the most out of your sale-leaseback agreement with Tax Natives

    There are plenty more tax considerations to make before you commit to a sale-leaseback agreement.

    If you want to keep your tax bill low, our network of tax consultants is here to help with expert tax advice. Get in touch with us and turn your property into potential.

    Considering a sale-leaseback transaction? Let Tax Natives connect you with tax specialists who will turn it into a win for your business.

    Ready to unlock your property’s potential? Contact Tax Natives today and explore how sale-leaseback agreements can boost your financial strategy.

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    Advantages of sale and leaseback agreements

    Sale and leaseback agreements let you sell your property and then lease it back to get all its value in cash. This way, you won’t have to worry about upkeep or if property prices drop—that’s now the buyer’s problem.

    Plus, you can write off the leasing expenses on your taxes, making this a smarter choice than other financing options. Turning a fixed asset into ready money will boost your financial security and give you more investment options, keeping your business flexible and well-funded.

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    Disadvantages of sale and leaseback agreements

    Choosing to sell your property and then lease it back can help you financially in the short term, but it also has downsides. One big drawback is that you won’t benefit if the property’s value goes up, which could also impact what your business is worth if you decide to sell it later.

    Also, once you become a renter instead of the owner, you might have to move when the lease is up. This can disrupt your business and might lead to extra costs. Another point is that not owning the property means you have less freedom to change the space as your business and its needs evolve.

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    Dive into sale and leaseback confidently with Tax Natives

    Considering a sale and leaseback transaction? Let Tax Natives connect you with tax advisors who specialise in turning this innovative financing strategy into a win for your business.

    Our global network of experts is ready to guide you through the complexities, ensuring your decisions are informed, strategic, and aligned with your company’s goals. Ready to unlock your property’s potential? Contact Tax Natives today and explore how sale and leaseback agreements can boost your financial strategy.

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