How to Structure Your Business Sale to Minimise Tax Liabilities

Selling your business is likely to be one of the most significant financial moments of your life. But when it comes to walking away with the maximum reward, it’s not just about the headline sale price — it’s about how the deal is structured and how much tax you’ll pay on the proceeds. With recent changes to Capital Gains Tax (CGT) and reliefs such as Business Asset Disposal Relief (BADR), it’s more important than ever to understand your options and plan ahead.

In this article, we outline how to structure your business sale in a tax-efficient way, with the latest facts and legislation from the 2024 Autumn Statement and 2025 tax year updates.

What Will You Be Taxed On?

If you're a UK business owner selling shares in your company, the gain you make will typically be subject to Capital Gains Tax (CGT).

The amount you pay depends on:

• Whether you qualify for Business Asset Disposal Relief (BADR)

• Your CGT rate (based on income and deal structure)

• Whether you sell shares or assets

• How and when the consideration is paid (e.g. lump sum, deferred, earn-out)

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Planning your sale around these elements can significantly reduce your tax liability.

What’s Changed in 2025?

Several tax changes are already in force or coming into effect soon. Key updates include:

🔺 Increased CGT Rates (from 30 October 2024)

• Basic-rate taxpayers: CGT increased from 10% to 18%

• Higher-rate taxpayers: CGT increased from 20% to 24%

• Trustees and personal representatives: CGT increased from 20% to 24%

Note: Residential property CGT rates remain unchanged at 18% and 28%.

(Source – UK Government, CGT rates)

Reduced Annual Exempt Amount

From April 2024 onwards:

• Individuals: £3,000

• Trustees: £1,500

This means more of your gain is now taxable compared to previous years.

Business Asset Disposal Relief (BADR) Changes

While BADR still offers a reduced tax rate, the rate is set to rise:

• 10% rate applies until 5 April 2025

• 14% rate applies from 6 April 2025

• 18% rate from 6 April 2026

The lifetime limit of £1 million in qualifying gains remains unchanged. Business owners planning to exit should consider selling before 6 April 2025 to benefit from the current 10% rate.

Share Sale vs Asset Sale – Tax Implications

Share Sale

This is often the most tax-efficient route for sellers. If you sell your shares in a trading limited company and qualify for BADR, you may pay just 10% CGT (if completing before April 2025).

Asset Sale

Selling assets (such as equipment, IP, or goodwill) from within the company can result in double taxation — once at the company level, and again when proceeds are extracted personally. A share sale is generally preferable, but structuring should be guided by commercial, legal and tax advice.

Additional Tax-Efficient Strategies

1. Maximise BADR Eligibility

You must:

• Own at least 5% of shares and voting rights

• Be an employee or officer of the business

• Own shares for at least 2 years

Planning tip: Spouses who meet these criteria can double the tax relief by using both allowances.

2. Deferment, Earn-Outs, and Loan Notes

Buyers may propose structured payments, such as:

• Deferred consideration

• Earn-outs based on future performance

• Loan notes or part-shares in the acquiring business

Caution: You may still be taxed upfront on the full gain unless elections are made to defer it. Always take advice before agreeing to terms.

3. Employee Ownership Trust (EOT) – Pay 0% CGT

Selling your business to an EOT can qualify you for 100% CGT relief, provided strict criteria are met. This structure is increasingly popular with retiring owners seeking a tax-efficient and legacy-focused exit.

New rules from 30 October 2024:

• EOT trustees must be UK-resident

• Sellers cannot control the trust post-sale

• Consideration must not exceed market value

Learn more at EOT.co.uk

Work With the Right Advisers

Structuring your sale for maximum tax efficiency requires coordination across:

• Corporate Finance/M&A advisers – to manage competitive sale processes

• Accountants & Tax advisers – to apply the latest reliefs and planning tools

• Corporate solicitors – to ensure the deal structure and contracts support your tax strategy

Don’t let tax become an afterthought in your exit strategy. By planning early, taking advantage of available reliefs, and structuring your deal with care, you can significantly reduce your liabilities and walk away with more of what you’ve worked so hard to build.

Thinking of selling in the next 12–24 months? Now is the time to act — Start with a confidential, no-obligation conversation today.