The Exit Toolkit · Sheet 16 of 20
The tax shape of your exit
BADR, structure and timing (take advice on all of it)
Share sale: one layer of tax
You personally pay Capital Gains Tax on your gain. Simple, and usually the most efficient route for a seller.
Business Asset Disposal Relief
For disposals from 6 April 2026, qualifying gains are taxed at 18% up to a £1m lifetime limit. Broadly you need two years holding at least 5% of a trading company in which you are a director or employee. Above the limit, or if you don't qualify, the main CGT rate is 24%.
The rate has been rising
BADR was 10% until April 2025, then 14%, now 18%. The gap to the main rate has narrowed, which changes the maths on timing. Check the current position before you rely on any figure.
Asset sale: two layers
The company pays corporation tax on its gains, then you pay tax again to extract the money. This is a big part of why sellers prefer share sales.
Pre-sale extraction
Dividends or pension contributions before completion have different tax outcomes, and the structure of the deal itself is a negotiation point with the buyer.
Beware clever schemes
Weigh the risk of any tax mitigation strategy carefully. If it looks too good, it probably is.
Bottom line
Numbers correct at July 2026 but tax rules change at every Budget. This sheet is a map, not advice: speak to your accountant or tax advisor before structuring anything. Source: HMRC helpsheet HS275.
Related
General information only, not legal advice. Steven Mather Solicitor is a trading name of Kesters Nook Limited; legal work is carried out through Nexa Law Limited, authorised and regulated by the SRA (number 633024).