A business sale is about more than just the price tag. It’s about how much you actually keep after tax. Get the structure wrong, and you could lose a significant chunk of your proceeds unnecessarily.
Our corporate finance specialists work closely with our award-winning Tax team, who ensure deals are structured in the most tax efficient way.
Megan Lewis-Bourke, Hazlewoods Tax Partner, shares some key tax considerations to plan for:
Most exiting business owners are expecting to pay Capital Gains Tax (CGT) on their sales proceeds, but the rates and allowances have become more complicated in recent years. The 10% Entrepreneurs’ Relief rate is gone and replaced with a higher rate of Business Asset Disposal Relief (BADR) instead. The rates that could apply to your disposal are as follows:
• 14% (if BADR qualifying and before 5 April 2026)
• 18% (if you have scope in your basic rate tax band or if the gain is BADR qualifying post 6 April 2026)
• 24% on all other gains.
The current BADR lifetime limit is £1m, so previous disposals could impact the rate that you pay. There are a few criteria for BADR that need to be in place for two years prior to a sale, so assessing the current qualifying status of shareholders now could save up to £60,000 on the eventual sale. For example, is the shareholder an officer or employee of the company or group?
It is also important to know what it is you are selling:
• Are you selling shares or a trade and assets?
• Do you own the company or business that you are disposing of or does your holding company hold the shares?
• Are their assets outside the company that you want to sell with it?
• Are their assets that are currently in the company that you want to hold onto afterwards?
Some of these scenarios could lead to a double layer of tax, a higher rate on some elements of the transaction or a dry tax charge on assets that you are not liquidating at the point of sale.
There could also be tax implications for the buyer e.g. Stamp Duty Land Tax on property not held within a corporate vehicle, that might lead to an unexpected price chip if not identified early on.
Tax planning is only one part of maximising your sale proceeds – legal readiness is just as critical.
Top 10 legal considerations:
1. Clean ownership and structure
A buyer wants certainty. That means a crystal clear cap table, up to date shareholder / LLP agreements, and no hidden restrictions that could slow the deal.
2. Governance in good order
Buyers expect flawless company records – from statutory filings to board minutes. Strong governance inspires confidence and protects valuation.
3. Regulatory and financial compliance
Regulatory approvals, tax compliance, and sector specific obligations must all be watertight. Any gaps here can stall the deal or trigger price negotiations.
4. Transferable commercial contracts
Client and supplier contracts need to be assignable or robust against change of control provisions. The smoother the handover, the stronger the buyer appetite.
5. Employment and people risks
From employment contracts and bonuses to TUPE and restrictive covenants, people related matters often define the risk profile of a transaction, particularly in services businesses.
6. IP and data ownership
Ensuring the company owns its intellectual property and meets GDPR obligations is essential. Any uncertainty around IP rights can be a deal breaker.
7. Litigation and legacy liabilities
Active disputes, insurance coverage, and historic claims all influence warranties, indemnities, and ultimately the final price.
8. Deal structure and tax efficiency
Whether it’s a share sale, asset sale, earn out, or rollover equity, tax and structuring decisions have a major impact on what sellers ultimately take home.
9. Bulletproof legal documentation and top tier advisers
From Heads of Terms to the SPA, disclosure letter, and post completion obligations, the legal documentation is where value and risk are ultimately locked in.
10. Smooth completion and handover
Getting the final steps right (approvals, payments, releases, and filings) ensures a clean, decisive transfer of ownership and sets the deal up for long term success.
Want to understand more about how tax could affect your sale? Please do reach out for a confidential chat.
