Selling Your UK Company: Capital Gains Tax and Business Asset Disposal Relief Explained
Reviewed by Sufyan Ali, Finance Director · Route Business Hub · Last reviewed 15 July 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.
How Capital Gains Tax applies to selling a company
When you sell shares in your own company, the gain — sale proceeds minus what you originally paid for the shares, plus allowable costs — is subject to Capital Gains Tax rather than income tax.
The CGT annual exempt amount has been cut sharply in recent years, down to £3,000 for individuals from April 2024, meaning most of a meaningful sale gain will actually be taxable — this wasn't true a few years ago when the allowance was substantially larger.
Standard CGT rates on shares apply unless a relief reduces them — Business Asset Disposal Relief is the main one relevant to a director selling their own trading company.
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.
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.
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.
Want the short version now? Our Corporation Tax Planning page covers the core of this today.
Book a Free Consultation