Selling Your UK Company: Capital Gains Tax and Business Asset Disposal Relief Explained
Reviewed by Sufyan Ali, Finance Director · Route Business Hub · Last reviewed 7 September 2026
The tax treatment of selling your company is decided largely by decisions made years before the sale, not in the weeks around completion. Business Asset Disposal Relief can cut the rate significantly, but only if a specific set of conditions have been met, and met for long enough, before the sale happens. If you're also planning a personal move to the UAE, note that becoming non-UK resident doesn't automatically remove a sale from UK Capital Gains Tax: HMRC's temporary non-residence rules can still tax gains realised within five years of leaving, which makes the sequencing of a sale relative to your own relocation timeline something to plan deliberately, not assume works in your favour by default.
What you actually pay: Capital Gains Tax rates on a company sale
Selling the shares in your own company produces a capital gain rather than income, so it falls under Capital Gains Tax. For 2026/27 that means 18% on gains sitting in your unused basic rate band and 24% on everything above it. If Business Asset Disposal Relief applies, the rate is 18% on the first £1 million of qualifying gains you make across your lifetime.
The gain is your sale proceeds less what you paid for the shares, less allowable costs — legal and professional fees on both the acquisition and the sale, and the subscription price of any shares issued to you directly. Only £3,000 of gains is exempt each tax year, so on a meaningful sale very nearly the whole gain is taxable.
One consequence of the April 2026 rate change deserves saying plainly, because most guidance still hasn't caught up: now that Business Asset Disposal Relief and the basic rate are both 18%, the relief only saves tax for higher and additional-rate taxpayers. On a large sale that is almost everyone, since the gain itself pushes you past the basic rate band. But on a smaller disposal that stays inside the band, claiming BADR may be worth nothing at all — and it still consumes part of your £1 million lifetime limit.
| Your position on a share sale | Rate for 2026/27 | What it applies to |
|---|---|---|
| Business Asset Disposal Relief claimed | 18% | First £1,000,000 of qualifying gains, lifetime |
| No relief, gain within your basic rate band | 18% | The unused part of your basic rate band |
| No relief, gain above the basic rate band | 24% | Everything above it — most of a large sale |
| Annual exempt amount | Nil | First £3,000 of total gains each tax year |
Sources: GOV.UK: Capital Gains Tax rates and allowances · GOV.UK: Business Asset Disposal Relief
Business Asset Disposal Relief: the conditions that actually matter
Business Asset Disposal Relief (the renamed Entrepreneurs' Relief, see GOV.UK's eligibility guidance) applies a reduced CGT rate on qualifying gains, up to a lifetime limit of £1 million of qualifying gains. The rate itself has risen in stages under previously-legislated increases, reaching 18% for disposals from 6 April 2026.
To qualify, you generally need to have held at least 5% of the ordinary share capital and voting rights, been an officer or employee of the company, and the company needs to have been a trading company (not primarily an investment company) for at least 24 months before the sale.
The 24-month qualifying period is the detail that catches people out in a rushed sale: a recent change to your shareholding structure, recently becoming an officer, or borderline trading status can all mean a sale today doesn't qualify even if it would a year from now.
A worked example: a £1,000,000 qualifying gain (the BADR lifetime limit)
With Business Asset Disposal Relief (conditions met, disposal from 6 April 2026): tax at 18% = £180,000.
Without it: as a higher or additional-rate taxpayer, standard CGT on shares from 6 April 2026, tax at 24% = £240,000.
The £60,000 difference on this example depends entirely on genuinely meeting the conditions above for the full 24 months before the sale, not on the size of the gain itself.
Using more than one £1 million limit: spouses and co-shareholders
The £1 million Business Asset Disposal Relief limit is per person, not per company — and so is the £3,000 annual exempt amount. Where a spouse, civil partner or fellow shareholder genuinely holds shares and genuinely qualifies, two lifetime limits are in play rather than one.
Transfers between spouses and civil partners happen on a no-gain, no-loss basis, so moving shares ahead of a sale does not trigger a charge in itself. The catch is that the receiving spouse has to meet every Business Asset Disposal Relief condition in their own right: at least 5% of the ordinary share capital and voting rights, officer or employee status, and the full 24 months. Shares transferred a month before completion qualify for nothing.
This is the sharpest illustration of why the planning window is measured in years. The same transfer that doubles the relief available when it is made two years before a sale achieves nothing at all when it is made during the negotiation.
Why the sale structure itself changes the tax outcome
A share sale (the buyer purchases your shares directly) is usually more CGT-efficient for the seller than an asset sale (the company sells its trading assets, and you extract the proceeds from the company afterwards). But buyers often prefer asset sales for their own reasons, so the structure is frequently negotiated rather than simply chosen by the seller.
The reason an asset sale costs the seller more is that it is taxed twice over. The company pays corporation tax on the gain it makes disposing of its trade and assets, and then you are taxed again — Capital Gains Tax on a liquidation distribution, or income tax on a dividend — to get what remains out of the company. A share sale is taxed once, in your hands. Business Asset Disposal Relief attaches to the shares you personally dispose of, not to a gain arising inside the company, so an asset sale can put the relief out of reach altogether.
If a sale happens via a Members' Voluntary Liquidation to extract remaining company value after trading has stopped, targeted anti-avoidance rules around "phoenixism" can recharacterise what looks like a capital distribution as income if a similar trade is continued in a new company shortly afterwards. A genuine trap for anyone winding down one venture to start something similar.
Why this needs planning years before a sale, not during it
The 24-month Business Asset Disposal Relief qualifying period alone means eligibility has to be considered while you're still actively running the business, not once a buyer is at the table.
Shareholding structure, whether family members holding shares also independently qualify, and whether the company's activities have drifted toward investment rather than trading over time are all far easier to fix two years out than two months out.
If a sale is even a plausible medium-term possibility, a periodic review of qualifying status, shareholding, and structure is worth doing well before it becomes urgent.
This is general information, not personalised advice. Tax treatment depends on your specific circumstances, and rates and thresholds shown here can change. Talk to us before acting on your own position.
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