What Taxes Do You Pay If You Sell Your Business In The UK?

Selling your business in the UK is a huge decision, not just emotionally, but financially too.

After years of hard graft and building, you’ll want to make sure you walk away with as much cash in your pocket possible. But one part that business owners might naturally overlook is taxes.

And whilst understanding taxes is important, a lot of it depends on how your business is structured, whether you sell shares or assets and which tax reliefs you might be able to take advantage of.

Sounds confusing right? Don’t worry – we break it down for you.

 

What Are The Main Taxes You’ll Pay If You Sell Your Business In The UK?

 

There are a few different taxes you will have to pay if you sell your business. These are:

 

Capital Gains Tax (CGT)

Whether you’re a sole trader, part of a partnership or selling shares in your company, you’ll normally have to pay Capital Gains Tax (CGT) on the profit you make from the sale of the business.

From April 2025, the rate of CGT is 18% for basic rate taxpayers (those earning below £50,270) and 24% for high rate tax payers (those earning above £50,271).

You also get a tax-free allowance of £3,000, so you’ll only pay Capital Gains Taxes on profits made over that number.

So, say you invested £50,000 in a company and you sold it for £150,000, you will pay CGT on £100,000, with £3000 of that being tax free.
 

Corporation Tax

If your business is a limited company with assets (like property, machines or IP), the company will pay Corporation Tax on profits.

As of April 2025, the rates are 19% for profits under £50,000 and 25% on profits over £250,000.

For profits between £50,000 and £250,000, a marginal rate of 26.5% is applied.

However, if you as the business owner are also paid a share of the profits, then you might also have to pay tax on the amount paid to you specifically.

 

Stamp Duty

If you’re selling shares in a company, the buyer will also have to pay 0.5% Stamp Duty Reserve Tax on the price of those shares.

 

Stamp Duty Land Tax (In Some Cases)

If your business owns property that is being sold as part of the sale, the buyer will have to pay Stamp Duty Land Tax (SDLT). This rate is between 0% – 12% based on the value of the property.

 

VAT

In some cases, VAT might be charged on the sale of the business assets, unless it qualifies as a Transfer of a Going Concern (TOGC).

According to Gov.UK, to qualify as a TOGC, the assets being sold must be:

• Capable of forming a separate business in their own right
• Used by the purchaser to carry on the same kind of business as that operated by the seller

This one can be a tad fiddly, so it’s worth speaking to a professional to understand if your business sale applies.

 

 

Are There Any Tax Reliefs On Selling A Business In The UK?

 

So whilst it might sound like a lot of taxes, the good news is that there are some tax reliefs that you can claim when selling a business.

Some of these include:

 

Business Asset Disposal Relief (BADR)

BADR, previously known as Entrepreneurs’ Relief, is a benefit that allows business owners to lower their CGT by 14% on gains up to £1 million throughout their life.

To qualify, you usually need to:

• Have owned the business for at least 2 years
• Be a sole trader, business partner, or hold at least 5% of shares and voting rights in a company where you’re a director/employee

 

Business Asset Rollover Relief

Business Asset Rollover Relief exists to incentive people to reinvest the money they have earnt from selling shares into a new qualifying business.

If they use the profit to buy new assets, they will not pay CGT until they sell these new assets – which means they can pay CGT on the original gain at a later date.

However, to qualify, they must:

• Buy the new asset within 3 years
• Invest in a business that is trading when you sell the old assets and buy the new ones
• Use the old and new assets in the business

If you only invest part of the proceeds from selling the old assets, then you may be able to gain partial relief.

 

Gift Hold-Over Relief

If you give away your business or sell it for less than its market value, you may be able to delay paying the CGT until the new owner sells it.

However, the shares cannot be publicly listed on a stock exchange and you must have at least 5% of voting rights in the company, making it your ‘personal company’.

 

Incorporation Relief

If you transfer your business to a company in return for shares, you can defer paying CGT on the gain.

In this case, you will only pay CGT when you sell (or dispose of) the shares.

 

Share Sale vs Asset Sale: Why It Makes A Difference

 

How you sell your business makes a big difference to the tax bill. The main two options are share sales and asset sales.

Before deciding the route you want to take, it’s always worth consulting with a professional to work out the most effective way to structure your deal.

Here is the difference:

 

Share Sale

A share sale is when you sell some or all of your shares in a company. In this case, ownership is transferred to the buyer, including all assets, debts and employee obligations.

In this case you will:

• You pay CGT on your gain, not Corporation Tax.
• BADR may apply to lower your tax rate.
• It’s usually the most tax-efficient option for sellers.

 

Asset Sale

This is when you sell off the company’s assets. This could be property, machines, stock, IP or anything else you have.

In an asset sale, the company will pay Corporation Tax on the profits from the asset sales.

Then, when the money lands in your pocket, you may have to pay Dividend Tax or CGT, which means the money is taxed twice.

The good thing about Asset Sales is that buyers don’t have to take on all the liabilities of a company, and they may be able to claim some tax relief on the assets.

For the buyers however, this usually comes with a higher tax bill.

 

Other Costs To Plan For When Selling A Business In The UK

 

It’s not just tax you need to plan for. Selling a business can come with a bunch of other costs, including fees for:

• Brokers if the deal was managed through them.
• Lawyers and compliance specialists.
• Accountancies.

If the sale affects employees, you might also need to invest in HR advice.

 

Selling A Business In The UK: What Are The Tax Implications?

 

The taxes you pay when selling your business in the UK mainly come down to Capital Gains Tax, Corporation Tax, Stamp Duty and VAT.

There are some reliefs that can help you keep a bit more in your pocket, but how you structure the sale is an important part of this.

Selling a business is a huge life event event.

Before going for it, make sure you plan ahead, get professional advice and structure the deal in the right way. After all, you want to pay your taxes, but you also want to maximise what you can put in your pocket.