How much tax do you pay when you sell a business in the UK?

Identify who is selling what

In a share sale, the individual shareholder disposes of shares. In a company asset sale, the company disposes of its own assets and receives the payment. Sole traders and partnerships have a different starting point again. This distinction belongs at the top of a tax estimate, before selecting a percentage.

The calculation also distinguishes proceeds from profit or gain. Purchase cost, qualifying expenses, losses, reliefs and the nature of each payment may matter. A headline price multiplied by a single rate is therefore an unreliable estimate of the total tax cost.

Reference: HMRC: Selling or closing your company

The current Capital Gains Tax starting points

For 2026/27, the standard individual Capital Gains Tax rates are 18% and 24%, with the applicable rate depending on the gain and available basic-rate band. The annual exempt amount is £3,000 for most individuals. These are rates on taxable gains, not an allowance or rate applied indiscriminately to every pound received.

Business Asset Disposal Relief has an 18% rate for qualifying disposals from 6 April 2026. The £1 million limit is a lifetime limit on eligible gains, not on sale proceeds, and earlier claims can reduce what remains. The previous year's 14% rate should not be used for a current disposal merely because negotiations started earlier.

Reference: GOV.UK: Capital Gains Tax rates and allowances

Reference: GOV.UK: Business Asset Disposal Relief eligibility

Check relief eligibility and payment timing

Relief depends on detailed facts. Common share-sale conditions concern the qualifying period, your role, the company's trading activities and your ownership rights; EMI shares have particular rules. Ask your tax adviser to record the evidence and review previous relief claims rather than assume every founder qualifies.

Money arriving later does not necessarily mean tax is deferred until it arrives. Fixed deferred consideration can enter the original gain calculation, and an uncertain earn-out can involve valuing a separate right. Ask for a tax-and-cash timeline covering signing, disposal, completion and each future payment.

Reference: GOV.UK: Business Asset Disposal Relief eligibility

Reference: HMRC: Ascertainable deferred consideration

Reference: HMRC: Unascertainable deferred payments

Make the estimate usable

Request a written calculation with assumptions and a reserve that matches the actual structure. It should explain what could change, who will file the return and which claims or elections need attention. Residential property and non-resident disposals can bring different reporting requirements, so a share-sale timetable should not be copied to every transaction.

This guide is a starting point for a UK discussion. Cross-border residence, trusts, share exchanges, employment-linked payments and company reorganisations need specialist analysis. Rates and reliefs can change; the figures here were checked against the linked official guidance on 8 September 2026.

• Confirm seller, asset and intended transaction structure.
• Check base cost, fees, losses and previous relief claims.
• Document eligibility for each proposed relief.
• Model tax alongside completion and deferred cash receipts.
• Agree reporting, claim deadlines and responsibility in writing.