If you're starting to think about selling, the figure that matters is what you'll keep after tax. That depends on how the deal is done as much as on the price. You may only have met Capital Gains Tax before on a second home or a few shares. On the sale of a business it's usually the largest single cost, and it's rarely the only tax involved.
This guide goes through each tax that can arise when you sell a business in the UK, and who pays it, for sales in the 2026 to 2027 tax year.
How the deal is structured decides most of the tax
If your business is a limited company, it can be sold in two ways. In a share sale, you sell your shares and the buyer takes over the company with everything in it. In an asset sale, your company sells the business and its assets, and the company is left behind holding the money. Our guide to share sales and asset sales covers the practical differences. The tax differences look like this.
| What changes | Share sale | Asset sale by your company |
|---|---|---|
| Who sells | You | Your company |
| Tax on the sale | Capital Gains Tax, paid by you | Corporation Tax, paid by the company |
| Getting the money to you | Paid to you on completion | Taxed again when you take it out of the company |
| VAT | Doesn't usually arise | Can arise, unless the sale is a transfer of a going concern |
| The buyer's stamp taxes | Stamp Duty on the shares | Stamp Duty Land Tax on any land or buildings |
If you're a sole trader or in a partnership, there are no shares to sell. You sell the business itself, and you pay Capital Gains Tax on the gain on assets such as goodwill and premises.
Capital Gains Tax on shares
Your gain is the price, less what you paid for the shares and the costs of buying and selling them. Everyone has a tax-free allowance, called the annual exempt amount, which is £3,000 for 2026 to 2027. You pay tax on the rest.
From 6 April 2026 the rates are 18% and 24%. To work out which applies, you add your taxable gains, after the allowance, to your taxable income for the year. The part that falls within the basic rate band, which is £37,700 for 2026 to 2027, is taxed at 18%. Anything above it is taxed at 24%. With a gain of several hundred thousand pounds, nearly all of it lands above the band, so 24% is the rate to plan around unless a relief applies.
The date of the sale for tax purposes is usually the date you exchange an unconditional contract, rather than the day the money arrives. If the contract has a condition, such as a landlord's consent, it's the date the condition is met. That decides which tax year the gain falls in.
Business Asset Disposal Relief and the new Founders' Relief
Business Asset Disposal Relief taxes qualifying gains at 18%, up to a limit that covers all your claims over your lifetime. On a share sale you usually need to have held at least 5% of the shares and votes, and to have been a director or employee of a trading company, for the two years before the sale.
The Budget on 28 October 2026 cut the lifetime limit from £1,000,000 to £500,000 for disposals made from 6 April 2027. The 18% rate stays. With the main rate at 24%, the most the relief can save one person is £60,000 on a sale before that date and £30,000 on a sale on or after it. A sale usually counts as made on the day an unconditional contract is made. HMRC says special provisions will apply to contracts entered into before 6 April 2027 that haven't been completed by then, and to certain share reorganisations and exchanges of securities not completed by then. The legislation will be in Finance Bill 2026-27. Our guide to what the Budget does to the tax on selling your business works out the difference for your own gain.
The Budget also announced a new Founders' Relief, which taxes qualifying gains at 10% on up to £10,000,000 over a lifetime, for disposals of shares from 6 April 2027. It's for founders and significant early investors in high-growth, innovative UK companies. The proposed conditions include holding at least 25% of the company when it started trading, and the company meeting turnover, employment and growth or innovation tests. They're out for consultation until 30 November 2026.
An asset sale means two layers of tax
When your company sells its business and assets, the company pays Corporation Tax on its profit from the sale. Goodwill that the company built or bought after 31 March 2002 is taxed as part of its trading profits, and gains on things like property are added in too.
The main rate of Corporation Tax is 25% for companies with profits over £250,000. The small profits rate of 19% applies to profits of £50,000 or less, with marginal relief in between. Those limits are reduced if the company has associated companies or a short accounting period. A large gain can take the company's profits for the year above £250,000, and then the main rate applies to all of them.
Corporation Tax is due nine months and one day after the end of the company's accounting period. A company with taxable profits over £1,500,000 pays in instalments instead.
Taking the money out
The money is now in the company rather than with you, and getting it out is taxed again. Paid as dividends, it's taxed above a £500 dividend allowance at these rates for 2026 to 2027.
- 10.75% on dividends in the basic rate band.
- 35.75% on dividends in the higher rate band.
- 39.35% on dividends in the additional rate band.
Another route is to close the company through a members' voluntary liquidation once the sale is done. An authorised insolvency practitioner winds it up. What's paid out to shareholders 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 was one of the main purposes. If the company is struck off rather than liquidated, payments to shareholders count as capital only up to £25,000 in total.
The Budget also announced that the rules on how payments from companies to their shareholders are taxed will be modernised from April 2028. HM Treasury's factsheet says this covers the anti-avoidance rules on taking profits out of a company, and arrangements that use a new holding company to take profits out as a capital gain. It also says dividend tax and Capital Gains Tax rates don't change, and that an ordinary sale of your shares to another person or business stays under Capital Gains Tax. The detail comes in draft legislation in 2027.
VAT and the transfer of a going concern
A share sale doesn't usually involve VAT. The assets stay with the company, so their ownership doesn't change and there's nothing for VAT to apply to.
In an asset sale, VAT would normally be charged on the assets. It isn't charged if the sale is a transfer of a going concern, and when the conditions are met those rules apply whether you want them or not. The main conditions are these.
- The buyer gets a business that's trading, with the assets it needs to carry on.
- The buyer intends to use the assets to carry on the same kind of business.
- If you're VAT registered, the buyer is registered already or becomes registered as a result of the sale.
- If only part of the business is sold, that part can operate on its own.
- There's no significant break in trading around the sale.
Property needs extra care. If you've opted to tax a commercial building, the buyer must also opt to tax it and notify HMRC by the time of the sale, or VAT is due on the building even if the rest of the sale qualifies. If VAT is charged when it shouldn't be, the buyer can't reclaim it and you have to refund it, so agree the treatment in the sale agreement.
Stamp Duty is the buyer's cost
On a share sale the buyer pays Stamp Duty of 0.5% of the price, rounded up to the nearest £5, where the price is over £1,000. The stock transfer form goes to HMRC, and the duty is paid within 30 days of the form being signed and dated. On an asset sale the buyer pays Stamp Duty Land Tax on any land or buildings in England, and different taxes apply in Scotland and Wales. These are the buyer's costs, but they affect what a buyer will pay.
The Budget confirmed that Stamp Duty and Stamp Duty Reserve Tax on shares will be replaced by a single Securities Transfer Tax from late 2027, through Finance Bill 2026-27.
Earn-outs, and pay for staying on
If part of the price is paid later or depends on how the business does, the timing of your tax changes. You can owe tax on a fixed deferred sum before you receive it, and an earn-out is taxed partly at the sale and partly as the payments arrive. Our guide to earn-outs and deferred consideration explains how.
There's a second risk if you're staying on. HMRC taxes an earn-out as employment income, with Income Tax and National Insurance, where part of it is really a reward for your work after the sale. Its guidance looks for signs that the earn-out is part of the price instead.
- The sale agreement shows it's paid for the shares, and its value reflects what they're worth.
- It isn't making up for a salary below what the job would pay.
- It doesn't depend on you staying employed beyond a reasonable period to protect the business you've sold.
- There are no personal performance targets in it.
- Sellers who leave get it on the same terms as those who stay.
Where it's partly both, HMRC splits it on a just and reasonable basis. Any salary or consultancy fee you're paid after the sale is taxed as income in the usual way.
When Capital Gains Tax is reported and paid
You don't get a bill for Capital Gains Tax. You report the gain yourself, either on your Self Assessment tax return for the year of the sale, or through HMRC's real time Capital Gains Tax service if you're UK resident. The real time service has to be used by 31 December after the end of the tax year.
Either way, the tax is due by 31 January after the end of the tax year. For a sale between 6 April 2026 and 5 April 2027, that's 31 January 2028, and it's paid as part of your balancing payment for the year. If you don't usually send a tax return and don't use the real time service, you need to register for Self Assessment by 5 October after the end of the tax year.
You may have heard of a 60-day deadline. For UK residents it applies only to UK residential property, such as a buy-to-let or a second home. Selling shares or a business, including its commercial premises, doesn't bring it into play. If you're not UK resident, the 60-day rule covers every sale of UK property or land, residential or not.
A made-up example with round numbers
This is a made-up example using the 2026 to 2027 rates, not a calculation for your situation. Sarah owns all the shares in a trading company she set up years ago, and she's been its director throughout. Her salary and other income use up her basic rate band, and she's never claimed Business Asset Disposal Relief. A buyer will pay £2,000,000, either for her shares or for the business and assets. To keep it simple, assume her gain on the shares and the company's profit on the business would each be the full £2,000,000, with no sale costs.
| Made-up example | Share sale | Asset sale, then liquidation |
|---|---|---|
| Corporation Tax at 25% on the company's £2,000,000 profit | None | £500,000 |
| Amount reaching Sarah before her own tax | £2,000,000 | £1,500,000 |
| First £1,000,000 of her gain at 18%, with the relief | £180,000 | £180,000 |
| Rest of her gain, less the £3,000 allowance, at 24% | £239,280 | £119,280 |
| Total tax | £419,280 | £799,280 |
| What Sarah keeps | £1,580,720 | £1,200,720 |
Here the asset sale leaves Sarah £380,000 worse off. The table assumes she sells before 6 April 2027. From that date the relief covers only the first £500,000 of her gain, which adds £30,000 to her tax under either structure. The liquidation figures also assume she still qualifies for the relief and doesn't start a similar business within two years, and they ignore the liquidator's fees. Taking £1,500,000 out as dividends would cost more again, because most of it would be taxed at 39.35%. The buyer would also pay Stamp Duty of £10,000 on the shares, or Stamp Duty Land Tax on any property in an asset purchase.
For your own figures, try our business sale tax calculator, and ask your accountant to compare what you'd keep under each structure before you compare offers.
Take advice before you agree heads of terms
Most of the choices that change the tax, such as whether it's a share or asset sale and how much of the price is paid later, are settled in heads of terms. That's the point to bring in your accountant, or a tax adviser who handles business sales.
These figures were checked after the Budget on 28 October 2026. It cut the Business Asset Disposal Relief lifetime limit to £500,000 for disposals from 6 April 2027 and added a Founders' Relief for a narrower group. It didn't change the rates of Capital Gains Tax, Corporation Tax or dividend tax. Check with your accountant before you agree a price and a structure.