Simple Tax Moves to Keep More of Your Sale Proceeds

1 Favour a share sale over an asset sale

Selling shares often qualifies for capital gains treatment at 10 % or 20 % rather than income tax rates as high as 45 %. It also avoids double taxation on profits already earned inside the company.

2 Secure Business Asset Disposal Relief (BADR)

• Hold at least 5 % of shares and voting rights for two years
• Ensure the company remains trading up to completion
• When conditions are met, the first £1 m of lifetime gains is taxed at 10 % instead of 20 %

Confirm with your accountant that you still meet the two-year rule before you sign heads of terms.

3 Spread gains across tax years with deferred payments

Seller finance or earn-outs let you receive part of the price after 5 April, pushing some gain into the next tax year. This can free an extra annual CGT allowance and keep each slice within lower bands.

4 Use pension contributions for last-minute relief

Before completion the company can make an employer pension contribution up to your available annual allowance. This reduces corporation tax in the final trading year and shifts cash to your pension pot tax-free.

5 Share ownership with your spouse or civil partner

Transferring shares between spouses is free of CGT. A modest stake moved at least two years pre-sale doubles the use of annual CGT allowances and BADR limits. Formal paperwork and updated share registers are essential.

6 Keep the company “trading”

More than 20 % of activity in investment assets or property can jeopardise reliefs. If you hold surplus cash or property, consider distributing or de-merging them before marketing the business.

7 Plan exit timing around year-end

Closing just after the company’s year-end gives you clean, signed accounts for due diligence and can align tax liabilities neatly with your personal filing cycle.

Quick self-check for owners

• Do you still meet the two-year BADR tests on shareholding and employment?
• Have you modelled the CGT bill on share sale versus asset sale?
• Could vendor finance move some gain into the next tax year?
• Have you spoken to your accountant about a final pension top-up?

Next step

Book a thirty-minute call with your tax adviser this week, walk through the seven points above, and lock any actions into your sale timetable before heads of terms are drafted.