Not every owner who's thinking about stepping back wants to sell everything and leave. Some would like to take money out of the business they've built while they carry on running it. Others want someone to share the decisions with now, and to hand over to in a few years. Selling part of the business can do both.
It also means you'll have a co-owner, and the agreement you make with them matters as much as the price. This guide explains how selling part of a business works in the UK. It's written mainly for owners of limited companies, where selling part means selling shares.
Why owners sell part of a business
The reasons tend to be practical.
- You'd like some of the value out now, rather than all of it riding on one business.
- You want to work less, with someone else carrying part of the load.
- You'd rather hand over gradually, to a buyer you've had time to get to know.
- You think the business will be worth more in a few years, and you'd like a share of that.
The other side is that you're no longer the only person deciding. Your co-owner will have their own plans for the business, and their own idea of when to sell it. Most of the work in a part sale goes into agreeing those things before you sign.
If you're a sole trader, there are no shares to sell. To sell part, you'd usually move the business into a limited company first, or bring the buyer in as a partner. Both have tax consequences, so talk to your accountant before you do either.
Selling shares and issuing new ones are different deals
There are two ways to end up with a new co-owner in your company, and they're easy to mix up because each leaves the buyer owning part of it.
| What happens | Who pays | Where the money goes |
|---|---|---|
| You sell some of your shares | The buyer | To you |
| The company issues new shares | The investor | To the company, to spend on the business |
When owners talk about selling part of their business, they usually mean the first. If the company issues new shares instead, your percentage falls but you aren't paid anything, because the money stays in the business. Some deals do a bit of each.
Before you agree anything, check your company's articles of association and any shareholders' agreement you already have. They may limit who you can sell to or give other shareholders first refusal. Under the standard model articles for private companies, the directors can refuse to register a transfer of shares.
The percentage you sell changes who decides
Most decisions in a company are made by its directors, but some of the bigger ones need the shareholders. An ordinary resolution needs more than half the votes. A special resolution, which is needed for things like changing the company's articles, needs at least 75%. Shareholders can also remove a director by ordinary resolution.
| If the buyer holds | What it usually means |
|---|---|
| 25% or less | You hold at least 75%, so you can still pass special resolutions on your own. |
| More than 25% | The buyer can block a special resolution, and is recorded at Companies House as a person with significant control. |
| Exactly 50% | Neither of you can pass an ordinary resolution alone, so a disagreement can leave the company stuck. |
| More than 50% | The buyer can pass ordinary resolutions, including removing a director, which could mean you. |
| 75% or more | The buyer can pass special resolutions on their own, such as changing the articles. |
These are the defaults, assuming one vote per share and that you own the rest. Shares can carry different rights, and a shareholders' agreement can give you a say over particular decisions whatever your percentage. That's often how an owner who sells more than half keeps some protection.
Selling half your business
Selling exactly half appeals to a lot of owners, because it feels fair. It's also the arrangement most likely to get stuck, because neither of you can outvote the other. If you're thinking of selling half, agree in advance how a disagreement gets settled. The usual tools are these.
- A list of decisions that need you both, with everything else left to whoever runs the business day to day.
- A casting vote for whoever chairs board meetings. The model articles give the chair one, but they can be changed.
- A deadlock clause setting out what happens if you can't agree, such as mediation and then one of you buying the other out at a price set by a formula or an independent valuer.
- An agreed date when the buyer will offer for the rest, so a deadlock has an end.
Agree the rest before you sell the first part
When you sell part, you're agreeing to more than the sale of some shares. You're also agreeing how you'll own the business together afterwards. That's usually set out in a shareholders' agreement, sometimes with new articles, and it deserves as much of your attention as the price.
- Your role. Your title, hours, pay and who you report to, and what happens if you want to do less.
- Decisions that need your agreement. Usually things like new borrowing, issuing new shares, selling the business's assets or changing your pay.
- Information. Regular management figures, so you know how the business is doing without having to ask.
- Dividends. Whether profits are paid out to the shareholders or kept in the business.
- Selling the rest. Whether you can require the buyer to buy your remaining shares, whether they can require you to sell, when either can happen, and how the price is worked out.
- A sale of the whole company. A drag-along clause lets the majority make the minority sell on the same terms if they find a buyer for everything. A tag-along clause lets the minority join in on the same terms if the majority sells.
- If you leave. Agreements often set a lower price for the shares of someone who leaves early or is dismissed, a bad leaver, than for someone who retires or falls ill, a good leaver. Read those definitions closely.
- Restrictions on you. How long after leaving you can't compete with the business or approach its staff and customers.
Ask the buyer how and roughly when they expect to sell, and how your shares would be valued then. Someone who buys part of a business usually wants all of it one day, or plans to sell the whole thing on. That's reasonable, but you should know before you sign, and it should be in writing.
What part of a business is worth
The starting point is the same as for the whole business. A buyer takes the profit they can rely on and multiplies it by a figure that reflects the risk, then adjusts for cash and debt. Our guide to how to value a business covers how that works, and our valuation tool gives you a rough range in a few minutes.
Part of a business isn't always worth its share of the whole. A holding that doesn't control the company can be valued at less per share, because its owner can't decide what the business does. That affects the shares you sell now, and it affects the shares you keep. The most useful thing you can do is agree now how the shares you keep will be valued when you sell them, so you aren't negotiating that from a weaker position later.
Tax when you sell part of your business
If you sell some of your shares, you'll usually pay Capital Gains Tax on the gain on those shares. For 2026 to 2027 the rates are 18% on gains within your basic rate band and 24% above it, after an annual tax-free allowance of £3,000.
Business Asset Disposal Relief taxes qualifying gains at 18%, up to a lifetime limit of £1,000,000. Selling in stages doesn't give you a new limit each time, but each sale can use whatever is left of it. Each sale is also tested on its own. To qualify on a later sale, you'll usually need to have held at least 5% of the shares and votes, and been a director or employee, for the two years before that sale. If the first sale takes you below 5%, or you stop working in the business, a later sale might not qualify.
The buyer usually pays Stamp Duty of 0.5% on shares bought with a stock transfer form, where the price is more than £1,000. It's due within 30 days of the form being signed and dated.
Sometimes the company itself buys back some of an owner's shares, for example so a co-owner ends up with a larger share. That payment is usually taxed as income, like a dividend, unless strict conditions are met. The buyback has to be mainly for the benefit of the company's trade, and you'll usually need to have owned the shares for at least five years and to reduce your holding substantially. HMRC will confirm the treatment in advance if you apply for clearance, and says it will reply within 30 days.
These figures are correct as of 19 October 2026. The Budget on 28 October 2026 may change them, so check with your accountant before you agree a price and a timetable.
How a sale of part usually runs
The steps are much the same as selling all of it. You agree confidentiality, then heads of terms, then the buyer carries out due diligence. The legal documents are a share purchase agreement for the shares you're selling and a shareholders' agreement, often with new articles, for the shares you keep.
On completion you sign a stock transfer form and the company updates its register of members. If the buyer now holds more than 25%, they're a person with significant control, and Companies House needs to be told.