Most owners of small businesses spend years building them and very little time thinking about how they'll leave. That's understandable. There's always something more pressing, and stepping back can feel a long way off. But every owner leaves eventually, and a plan made early gives you much more say over who takes over and what you walk away with.
An exit strategy doesn't need to be a long document. It's a decision about how and roughly when you'd like to step back, and what has to be true for that to work. This guide sets out the routes open to a small business owner in the UK, and how to decide whether selling is the right one for you.
Start with what you want
The right exit depends more on you than on the business. Before you look at the options, write down a few things.
- When you'd like to stop working full time, and whether you'd stay on in any role.
- What you need to walk away with after tax, which isn't the same as the price.
- Who you'd like to own the business next, if you have a preference.
- Whether you'd keep a share for a while and sell the rest later.
- What matters beyond the money, such as the name over the door, your team or your customers.
- What would happen to the business if you couldn't work from tomorrow.
The last one is worth more thought than it usually gets. An exit you plan is usually better than one forced on you by ill health or a family emergency.
The main exit routes for a small business
| Route | Often suits | What to watch |
|---|---|---|
| Selling all of it | Owners who want a clean break | A handover period, and part of the price paid later |
| Selling part, then the rest later | Owners who want some money now and to carry on for a while | The agreement covering the shares you keep |
| Selling to your managers | Businesses with a strong management team | How the managers will fund it |
| Selling to an employee ownership trust | Owners who want the business to stay independent | The price is usually paid over several years from profits |
| Passing it to family | Families with someone who wants to run it | Fairness between children, and the tax |
| Keeping it, with a manager in charge | Owners happy to own it without running it | You still carry the risk |
| Closing it | Businesses that can't run without the owner | You keep the cash and assets, but nobody pays for the profit |
Selling all of it
This is what most people mean by an exit. You sell the company, or the business and its assets, to a competitor or an investor. It gives the cleanest break, though most buyers will want you to stay for a handover, and some will pay part of the price later or tie it to how the business does.
Selling part and stepping back in stages
You sell some of your shares now and stay on in a smaller role, then sell the rest later. It suits owners who aren't ready to stop, or who want to hand over to a buyer they've had time to get to know. The agreement about the shares you keep matters as much as the price. Our guide to selling part of your business goes through it.
Selling to your managers or employees
If you have managers who could run the business, they may be able to buy it, usually with money from a bank or an investor and often with part of the price paid to you over time. Our guide to management buyouts explains how. An employee ownership trust buys the business on behalf of all the staff, usually paying you from future profits. For sales on or after 26 November 2025, the tax relief on a sale to a trust covers half the gain rather than all of it.
Passing it to family
Handing the business to a son or daughter can keep it in the family, but it raises questions a sale to a stranger doesn't. You'll need to know that they want it and can run it, and to think about fairness to your other children. You may also need money from the business to live on, which means they'd be paying you over time.
Giving shares to anyone other than your husband, wife or civil partner can bring a Capital Gains Tax bill, even though no money changes hands. Gift Hold-Over Relief can pass the gain on to the person receiving the shares, so they pay it when they eventually sell, as long as the company is mainly a trading business and the other conditions are met. Take advice early, because the rules for gifts and for inheritance both come into it.
Keeping it, with a manager in charge
Some owners step back from running the business without selling it, and live on the profits. It can work well if you have a manager you trust. You still carry the risk, though, and if you stop being a director or employee, a later sale of your shares might not qualify for Business Asset Disposal Relief.
Closing it
If the business can't run without you, closing it may be the realistic option. You collect what's owed, pay the debts, sell the assets and take out what's left. For a limited company that's usually done through a members' voluntary liquidation, run by a licensed insolvency practitioner, or by applying to strike the company off.
Money paid out in a members' voluntary liquidation is usually treated as capital, so Capital Gains Tax applies and Business Asset Disposal Relief may be available. It can be taxed as income instead if, within two years, you carry on or are involved in a similar trade and avoiding Income Tax looks like one of the main purposes. If the company is struck off rather than liquidated, payments to shareholders count as capital only if they come to £25,000 or less in total. Above that, the whole amount is taxed as income, not just the part over £25,000. Talk to your accountant before you choose.
Deciding whether to sell your business
There's no right moment for everyone, but some signs suggest a sale could make sense now.
- You've lost the appetite for the next few years, or for the investment the business needs.
- Profit is steady or rising, and your last three years of accounts show it.
- Someone other than you could run the day to day.
- Your health or your plans have changed.
Other signs suggest it may be worth waiting.
- Profit has dipped for a reason you can fix, and you'd rather sell after it recovers.
- One customer, or one person, often you, matters too much to the business.
- You don't yet meet the two-year conditions for Business Asset Disposal Relief.
- You have no idea what you'd do the day after you sell.
The last one is more common than owners admit. Some sell part of the business rather than all of it for exactly that reason.
Tax shapes the timing
If you sell shares, you'll usually pay Capital Gains Tax on the gain. For 2026 to 2027 the rates are 18% on gains within your basic rate band and 24% above it. Business Asset Disposal Relief taxes qualifying gains at 18% up to a lifetime limit of £1,000,000, as long as you've met its conditions for the two years before the sale. That two-year test is often what sets the earliest sensible date for a sale, especially if shares have changed hands recently. The Budget on 28 October 2026 cut the lifetime limit to £500,000 for disposals made on or after 6 April 2027, with special provisions for contracts entered into before that date but not completed by then. On a gain above £500,000, the date of a sale can now change the tax.
Inheritance Tax comes into it too, if you're weighing a sale against keeping the business and passing it on. Shares in an unlisted company that trades, rather than holding investments, can qualify for Business Relief. Since 6 April 2026, the relief is 100% on the first £2,500,000 of business and agricultural property combined, and 50% above that. Any unused allowance can pass to a husband, wife or civil partner. You need to have owned the business for at least two years. Money from a sale isn't business property, so it doesn't get the relief.
These figures were checked after the Budget on 28 October 2026. It cut the Business Asset Disposal Relief limit, and didn't change the rates of Capital Gains Tax or Business Relief. Check with your accountant before you set a date.
Getting ready, whichever route you choose
The same things help almost every exit. A business with clean accounts and its paperwork in order, which runs without you, is easier to sell and easier to hand over. Getting there takes time, which is the main reason to start early.
If you'd like a sense of where you stand, our five-minute readiness check asks about you and the business rather than the price, and shows what's most likely to hold you back.