Business exit planning.

On a share sale you sell your shares and the buyer takes over the company, with its history. You pay capital gains tax on your gain, at 18% or 24%, or at 18% under Business Asset Disposal Relief if you qualify.

On an asset sale the company sells its trade and assets. The company pays corporation tax on its gains, at 19% to 25% depending on its profits. The money is then still inside the company. Paying it out as a dividend is taxed again at up to 39.35%, so an asset sale often means two layers of tax. Buyers often prefer assets, because they choose what they take and leave the company's past liabilities behind. The tax gap is often part of the price negotiation.

Many sales are not paid in full on completion. Where the amount of a deferred payment is fixed, the whole price is taxed at the date of sale. Where an earn-out depends on future profits, the right to it is valued and taxed at the date of sale, and later payments are a separate disposal that does not get Business Asset Disposal Relief. An earn-out paid in the buyer's shares or loan notes can sometimes defer the gain instead. An earn-out that depends on you staying on as an employee risks being taxed as employment income. We review the draft sale agreement with this in mind.

Business Asset Disposal Relief taxes qualifying gains at 18% for disposals from 6 April 2026, up from 14% in 2025/26 and 10% before 6 April 2025. Gains above the £1 million lifetime limit are taxed at the normal rates.

For a sale of shares not acquired through EMI options, these must apply for at least 2 years up to the sale:

• you are an employee or office holder of the company or a company in its group
• the company is a trading company or the holding company of a trading group
• you hold at least 5% of the shares and voting rights, and are entitled to at least 5% of distributable profits and assets on a winding up, or at least 5% of the proceeds if the company is sold

If the company stops trading, you can still qualify if you dispose of your shares within 3 years. For a 2026/27 disposal, the claim must be made by 31 January 2029. Cash or investments building up in the company can put trading status at risk, which is why we check this early.

You can give shares to your spouse or civil partner without capital gains tax, and each of you has your own £1 million limit. Your spouse must then meet the conditions personally for 2 years, including working for the company. Our Business Asset Disposal Relief article covers the relief in more depth.

Moving abroad does not take a sale out of UK tax on its own. If you are not UK resident for a tax year, you are generally outside UK capital gains tax on shares in a trading company. Whether that applies to you depends on the timing and your residence position.

The main risk is the temporary non-residence rule. It applies if you were UK resident in at least 4 of the 7 tax years before the year you left, and you are non-resident for 5 years or less. Gains on shares you owned before leaving and sold while abroad are then taxed as if they arose in the period you return. A double tax treaty does not stop this charge. If you are planning a members' voluntary liquidation, the timing of the distributions needs the same check.

Dividends are caught too. If you held a material interest in a close company in the year you left or the 3 tax years before, its dividends paid while you are temporarily non-resident are added to your income for the year you return. From 2026/27 this includes dividends paid out of profits made after you left.

The year you leave needs care. You are UK resident for the whole of that tax year unless split year treatment applies, for example because you start full-time work abroad or stop having any home in the UK. Each case has its own conditions. If one applies, a sale in the overseas part of the year is generally outside UK capital gains tax, subject to the temporary non-residence rule. A sale before you leave is taxed in the normal way.

Some shares stay within UK tax even if you never come back. If at least 75% of the company's value comes from UK land and you held 25% or more at any time in the 2 years before the sale, non-resident capital gains tax applies. There is an exception where the land is used in the company's trade.

Your new country may tax the sale itself, so check its rules before you go. The Statutory Residence Test needs working through properly for each year, not assumed. See our pages on leaving the UK and international tax.

A members' voluntary liquidation is a formal winding up of a solvent company. The directors swear a declaration of solvency, the shareholders appoint an insolvency practitioner as liquidator, and the liquidator pays the creditors and distributes what is left. Distributions in a winding up are not income distributions. They are treated as a disposal of your shares for capital gains tax, so Business Asset Disposal Relief can apply if you qualify.

The anti-avoidance rule in section 396B of ITTOIA 2005 can turn those distributions into dividends. It can apply where you held at least 5%, the company was a close company, you carry on a similar trade or activity within 2 years of a distribution, and one of the main purposes of the winding up was to reduce income tax. Closing one company and starting a similar one needs advice first.

Striking the company off with form DS01 is cheaper, but distributions made in anticipation of strike-off are only treated as capital if they total £25,000 or less. Above that, the whole amount is taxed as a distribution, not just the excess. Anything left in the company when it is struck off passes to the Crown.

Yes. A company buyback, or purchase of own shares, lets one shareholder leave while the others stay. Without special treatment, the payment above the capital originally subscribed is taxed as a dividend. Section 1033 of CTA 2010 treats it as capital instead where the company is an unquoted trading company and the buyback is made wholly or mainly to benefit the trade, and is not part of arrangements to avoid tax. The conditions include:

• you are UK resident in the tax year of the purchase
• you have normally owned the shares for 5 years
• your interest, with your associates, falls to no more than 75% of what it was
• afterwards you are not connected with the company, broadly holding no more than 30%

The company can apply to HMRC for advance clearance before it pays. We prepare that application and check the company law side with your solicitor.

An employee ownership trust holds a controlling interest in a trading company for the benefit of all its employees. If you sell shares to the trust and the relief conditions are met, part of your gain is exempt from capital gains tax. For disposals from 26 November 2025, half of the gain is exempt and the other half is taxed under the normal rules. Earlier disposals were fully exempt. Business Asset Disposal Relief cannot be claimed as well.

Since 30 October 2024 there are 3 further conditions. The trustees must be UK resident. Former owners and people connected with them must make up fewer than half of the trustees and must not control the trust. The trustees must take reasonable steps, usually an independent valuation, to make sure they pay no more than market value and a commercial interest rate on deferred payments. If the trust stops meeting the conditions in the 4 tax years after the year of sale, the relief is withdrawn. See our succession planning page for how this fits with handing on a business.

Shares in an unlisted trading company you have owned for at least 2 years can qualify for business relief. For deaths from 6 April 2026, 100% relief is capped at £2.5 million of business and agricultural property, with 50% relief above that. Unused allowance can be transferred from a spouse or civil partner who died first, giving up to £5 million.

Selling changes this. Relief is not available on a business that is being sold, unless the sale is to a company that will carry it on in return mainly for shares. Once the sale completes, you hold cash, which is not business property, so it generally falls into your estate at 40% above your nil rate bands. We plan for this before completion, using lifetime gifts, trusts or a family investment company where they fit.