UK tax on selling business shares 2026/27
Selling company shares in 2026/27: BADR and Investors' Relief at 18% up to £1,000,000 lifetime, share vs asset sales, earn-outs, MVLs, SSE and gifts.
Selling shares in a UK company is normally charged to Capital Gains Tax. For 2026/27 the main rates are 18% and 24%; Business Asset Disposal Relief and Investors' Relief each tax qualifying gains at 18% up to £1,000,000 over a lifetime. This guide covers the conditions for each, share and asset sales, earn-outs, members' voluntary liquidations, the Substantial Shareholding Exemption for corporate sellers and gifts of shares.
Key reliefs at a glance
| Relief | Rate | Limit | Holding period |
|---|---|---|---|
| BADR | 18% | £1,000,000 lifetime | 2 years |
| Investors' Relief | 18% | £1,000,000 lifetime | 3 years |
| Substantial Shareholding Exemption (companies) | Exempt | None | 12 months in the last 6 years |
| No relief | 18% / 24% | - | - |
| Gift hold-over relief | Gain deferred | - | - |
Frequently asked questions
What is Business Asset Disposal Relief?
BADR taxes qualifying gains at 18% for disposals from 6 April 2026 (14% in 2025/26, 10% before), up to a £1,000,000 lifetime limit. For shares, for at least 2 years before the sale the company must be a trading company (or holding company of a trading group), it must be your personal company (at least 5% of the shares and voting rights, plus a 5% economic entitlement), and you must be an officer or employee. Example: a £600,000 qualifying gain for a higher-rate taxpayer, after the £3,000 annual exempt amount, costs £107,460 with BADR against £143,280 at 24%.
How does Investors' Relief differ from BADR?
Investors' Relief is for outside investors. It has the same 18% rate from 6 April 2026 and its own £1,000,000 lifetime limit, cut from £10 million for disposals on or after 30 October 2024. The shares must be newly issued to you, subscribed for by you, on or after 17 March 2016 by an unlisted trading company, held for at least 3 years, and neither you nor a connected person may be a relevant employee of the company during that time (TCGA 1992 s.169VB).
Should I sell shares or business assets?
In a share sale you sell the company, liabilities included, and pay Capital Gains Tax on your gain, with BADR if you qualify. In an asset sale the company sells the business and pays Corporation Tax on its gains; getting the money out to you then involves a second layer of tax, as a dividend or a capital distribution on winding up. Sellers often prefer share sales for that reason; buyers often prefer assets to avoid taking on the company's history.
How is an earn-out taxed?
If the extra payment is a right to future cash, the right itself is generally treated as an asset valued at completion and taxed then, with a further gain or loss when the cash arrives (the Marren v Ingles principle). If the earn-out will be satisfied in shares or securities of the buyer, TCGA 1992 s.138A treats the right as a security of the buyer, so the gain on it can be deferred, unless you elect for that not to apply. The choice affects whether and when BADR can be claimed, so take advice before completion.
How does a members' voluntary liquidation work?
An MVL winds up a solvent company: the directors make a statutory declaration of solvency (Insolvency Act 1986 s.89) that debts will be paid within 12 months, and the shareholders resolve to wind up. Distributions in the winding up are normally capital, so Capital Gains Tax and possibly BADR apply. An anti-avoidance rule can treat them as income if you carry on a similar trade or activity within 2 years.
What is the Substantial Shareholding Exemption?
It exempts a company's gain on selling shares in another trading company or group from Corporation Tax. The seller must have held at least 10% throughout a 12-month period beginning not more than 6 years before the sale (TCGA 1992 Sch 7AC). The old requirement for the selling company itself to be trading has been repealed. A loss on a disposal that qualifies is not allowable.
Can I give business shares to family?
Gifts to a spouse or civil partner are at no gain and no loss (TCGA 1992 s.58). A gift to anyone else is a disposal at market value, but gift hold-over relief (s.165) can defer the gain if you and the recipient claim it, for shares in an unlisted trading company or in a listed trading company that is your personal company. The recipient then takes over your base cost. For Inheritance Tax the gift is normally a potentially exempt transfer.
Can a non-resident sell UK company shares without UK tax?
Non-residents are generally outside UK Capital Gains Tax on shares, but disposals of interests in UK property-rich companies are within it. Double taxation agreements and the rules in each country decide where the gain is taxed. On the buying side, Stamp Duty or Stamp Duty Reserve Tax at 0.5% is normally due on a purchase of UK shares.