How to Sell Your Business in the UK: 2026/27 Guide

Published: 18 September 2026 | Last updated: September 2026 | Figures apply to the 2026/27 tax year (6 April 2026 to 5 April 2027)

Most owners sell a business once in their lives, so almost nobody comes to the process with experience. That’s why so many deals are judged on the headline price, when the figure that really matters is what lands in your bank account after tax, fees and any money the buyer holds back.

This guide covers the whole journey for UK sole traders, partners and company owners: how to tell whether you’re ready, what a buyer will actually pay for, the eight steps of a sale, the tax you’ll face under 2026/27 rules, and the duties that carry on after completion day.

Is your business ready to sell?

Readiness has two halves: the business and you. A buyer is paying for profit they expect to continue after you’ve gone. So the real question isn’t only “is it profitable?” but “will it stay profitable without me?”

Signs it’s the right time to sell

• Profits have been steady or rising for at least two to three years, so a buyer sees a trend rather than one lucky year.
• The business could run for a fortnight without you, and customers deal with your team as well as with you.
• Your accounts are up to date, your filings are on time, and business and personal spending are kept apart.
• There’s no cliff edge ahead, such as a major contract ending or a lease with only months left to run.
• You know what comes next, whether that’s retirement, a new venture or simply releasing capital.

None of these is essential on its own. But each one you can’t tick becomes a reason for a buyer to argue the price down. The weakest position to sell from is having no choice: illness, burnout or falling sales all show up at the negotiating table.

What if your business won’t sell?

Some businesses are hard to sell because, in practice, the business is the owner. A one-person consultancy whose clients hire you for your judgement has little to hand over once you leave. That doesn’t leave you with nothing, but it does change the plan.

You may still be able to sell parts of it: a client list, equipment, a website with steady traffic or a brand name. Sole traders can simply stop trading, tell HMRC and file a final Self Assessment return. A limited company with no debts can apply to be struck off the register, which costs £13 when filed online. Where a company has built up significant cash, a members’ voluntary liquidation run by a licensed insolvency practitioner is the usual route, and BADR may still apply to what you receive if you meet the conditions. Take advice before choosing, because the order in which you do things affects the tax.

Sole trader, partnership or limited company: what you’re actually selling

The legal form of your business decides what you can put on the table, who the seller is, and how the proceeds are taxed. Get this clear before you speak to a single buyer.

Selling as a sole trader or partner

A sole trader has no shares to sell, because you and the business are the same legal person. What you sell is a bundle of assets: goodwill (your customer base, name and reputation), equipment, vehicles, stock, and sometimes the benefit of contracts or a lease. Contracts and leases usually need the other party’s consent before they can be transferred.

You pay any Capital Gains Tax personally on gains from chargeable assets such as goodwill and premises. Stock is treated differently: it’s normally included in your final trading profits and taxed as income. In a partnership, each partner is taxed on their own share of the gain, and your partnership agreement may already set out how an outgoing partner is bought out.

Selling a limited company

In a share sale, the buyer takes ownership of the company, including its history and liabilities, and the seller usually pays Capital Gains Tax once. In an asset sale, the company sells selected assets, pays Corporation Tax on any gain, and owners face a second tax charge when extracting the cash. Sellers generally prefer share sales; buyers often prefer assets.

Who pays tax, and how many times, depends on which kind of sale you agree.

Buyers of small companies often push for an asset sale because it lets them leave behind anything that went wrong before they arrived, such as an old tax error or a dispute with a former employee. If you want a share sale, expect to give warranties (formal statements of fact about the company) and indemnities (promises to cover specific losses). Expect the price to become part of that conversation too.

How much is your business worth?

A business is worth what a willing buyer will pay, but buyers don’t start from a blank sheet. Most anchor on one of three methods, and knowing which one they’re using helps you respond.

Earnings multiples (EBITDA) explained

EBITDA stands for earnings before interest, tax, depreciation and amortisation. Put simply, it’s the operating profit the business makes before financing costs and accounting adjustments. Buyers multiply it by a figure that reflects risk: the more predictable and less owner-dependent the profit, the higher the multiple.

Before multiplying, they “normalise” the profit. Say you pay yourself £20,000, but a replacement manager would cost £55,000. The buyer will reduce profit by the £35,000 difference. Personal costs run through the business get added back, and one-off windfalls are stripped out.

Illustrative only: a business with normalised EBITDA of £150,000 that attracts a multiple of four would be valued at about £600,000. Real multiples vary widely by sector, size and risk, so use this to see how the maths works, not as a benchmark for your own business.

Asset-based and market-based valuations

An asset-based valuation adds up what the business owns and subtracts what it owes. It tends to set a floor for property-heavy businesses, or for those making little or no profit. A market-based valuation looks at what similar businesses have sold for. That’s useful in principle, but reliable sale data for small private firms is thin, so it’s usually a sense check rather than the main method.

What pushes the price up or down

Buyers pay more for profit they can trust to continue without you.

How to sell your business: step by step

Every sale is different, but most follow the same eight stages. Some overlap, and a few (especially the first two) are worth starting long before you tell anyone you’re thinking of selling.

1. Start planning 12 to 24 months ahead. This is the window to tidy your accounts, reduce how much the business leans on you, and check you’ll meet the two-year conditions for Business Asset Disposal Relief on the date you actually expect to sell.
2. Get your records sale-ready. A buyer’s advisers will ask for everything in the checklist below. Having it organised before they ask speeds up the deal and signals a well-run business.
3. Get an independent valuation. Know your realistic range, and your walk-away figure, before you hear a buyer’s opening offer.
4. Choose your exit route. A competitor, your managers, your employees and your family are very different buyers. The next section compares them.
5. Find buyers, confidentially. Brokers reach a wider pool and handle early enquiries, usually for a success fee. Approaching known buyers directly can be quicker and cheaper. Either way, share a short anonymous profile first, and send detailed figures only once a non-disclosure agreement (NDA) is signed.
6. Agree heads of terms. This short document records the price, the structure (shares or assets), how and when you’ll be paid, any exclusivity period and your handover role. It’s mostly not legally binding, but it sets the frame for everything that follows.
7. Get through due diligence. The buyer’s accountants and solicitors examine the business in detail. You respond with documents and a disclosure letter that flags any known issues against the warranties you’ll give.
8. Sign and complete. The deal is set out in a share purchase agreement or an asset purchase agreement. On completion, ownership passes, money moves, and your agreed handover period begins.

Who can buy your business? Exit routes compared

The buyer you choose shapes the price, the timetable, how you’re paid and what happens to your staff afterwards. Here’s how the four main routes compare.

Each buyer type trades speed, price and control in a different way.

Trade sale to a competitor or investor

A competitor, supplier or investor buys the business outright. This route often achieves the best price, because a trade buyer may value things only they can use, such as your customer list, location or team. It also brings the closest scrutiny. Expect thorough due diligence, detailed warranties and questions about how long you’ll stay on for handover.

Management buy-out

Your existing managers buy the business, usually with a mix of their own money, bank borrowing, outside investment or payments to you spread over time. The upside is a buyer who already understands the business, and customers and staff see continuity. The catch is money. Managers rarely have enough cash, so part of your price often depends on how the business performs after you’ve stepped back.

Employee Ownership Trust (EOT)

An EOT is a trust that buys a controlling stake (more than half the shares) and holds it for the benefit of all employees. The trust rarely has much money of its own, so the price is typically paid over several years out of the company’s future profits. In effect, you become a lender to your former business.

The tax position changed at the Autumn Budget 2025. For sales on or after 26 November 2025, half of your gain is exempt and the other half is taxed at normal Capital Gains Tax rates, with no BADR available on that half. Governance rules were also tightened from 30 October 2024, including requirements for the trust to be independent of former owners. Once a company is owned by an EOT, it can pay employees income-tax-free bonuses of up to £3,600 each per tax year, although National Insurance still applies.

Passing the business to family

Handing the business to children or relatives is often less about price and more about passing the business to the next generation in good shape. Tax doesn’t disappear, though. Gifting shares or business assets is usually treated as a disposal at market value for Capital Gains Tax, although holdover relief can defer the gain, and inheritance tax rules on business property changed from April 2026. This route needs specialist advice before anything is signed.

How much tax will you pay when you sell? (2026/27)

Most UK business sales are taxed under Capital Gains Tax. For 2026/27, gains are taxed at 18% within your unused basic rate band and 24% above it, after a £3,000 annual exempt amount. If you qualify for Business Asset Disposal Relief, the rate is 18% on up to £1 million of lifetime gains. Companies selling assets pay Corporation Tax instead.

For the wider picture on income tax, Corporation Tax and dividends, see our guide to 2026/27 rates for sole traders and companies.

Capital Gains Tax rates and the £3,000 allowance

Your gain is the sale price minus what the business or shares originally cost you, minus allowable costs. Allowable costs include the fees you pay to sell, such as legal, accountancy and broker fees. GOV.UK confirms that sole traders and partners pay Capital Gains Tax on business assets, while limited companies pay Corporation Tax on gains from selling their own assets.

The first £3,000 of your total gains in the tax year is tax-free. After that, the rate depends on your income. Gains are added on top of your taxable income: the part that fits within your unused basic rate band is taxed at 18%, and anything above it at 24%.

Business Asset Disposal Relief: who qualifies

Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) reduces Capital Gains Tax on qualifying business disposals to 18% from 6 April 2026, on up to £1 million of lifetime gains. You generally need to have owned the business, or held at least 5% of a trading company as an officer or employee, for two years before selling.

• Sole traders and partners: you must have owned the business for at least two years up to the date of sale. The same applies if you close the business, and in that case the assets usually need to be sold within three years of closing.
• Company shareholders: for the full two years before the sale, the company must be a trading company and your “personal company” (broadly, at least 5% of the shares and voting rights, plus a matching economic interest), and you must be an officer or employee.

You can check the official BADR eligibility rules and rates on GOV.UK. You claim the relief through your Self Assessment tax return. For a sale in 2026/27, the tax is due by 31 January 2028, and the claim deadline is 31 January 2029.

One point surprises many sellers. BADR’s rate of 18% now matches the basic Capital Gains Tax rate, so the relief only saves money on gains that would otherwise be taxed at 24%. The largest possible saving is six percentage points on £1 million, or £60,000.

Illustrative example: one £600,000 sale, three outcomes

The same £600,000 sale can leave the seller with very different amounts, depending on the route and on BADR.

On paper the EOT wins. In practice, a trade buyer may pay most of the money at completion, while the EOT pays out of future profits over several years. If the business struggles after you leave, the later payments are at risk. Missing BADR, meanwhile, would cost this seller £35,814. That’s why the two-year conditions deserve a diary date, not a guess. Tax matters, but it shouldn’t be the only thing that decides your route.

Deferred payments and earn-outs: when the tax falls due

If part of the price is paid later, Capital Gains Tax is normally still charged on the full agreed price in the tax year of the sale, even though you haven’t received it all yet. Where payments are spread over more than 18 months, HMRC may let you pay the tax in instalments over up to eight years.

Earn-outs, where later payments depend on how the business performs, are taxed differently, and those later payments may not qualify for BADR. Get the tax treatment modelled before you sign heads of terms, not after.

Your legal duties when selling

A sale isn’t finished when the money arrives. Several people and organisations need to be told, and some of those duties begin before completion.

Telling and protecting staff (TUPE)

In an asset sale, and whenever a sole trader sells the business, the Transfer of Undertakings (Protection of Employment) Regulations, known as TUPE, usually apply. Employees move to the buyer on their existing terms, and their length of service carries across. GOV.UK sets out how employment contracts transfer under TUPE, including what can and can’t change.

Before the transfer, both the old and new employer must inform staff representatives, and consult them where changes are planned. You must also give the buyer written details of the transferring employees at least 28 days before the transfer. Getting this wrong can lead to a tribunal award of up to 13 weeks’ pay for each affected employee.

A share sale is different. The company stays the employer; only its owners change. Acas explains that TUPE is not likely to apply to a transfer of shares. Even so, staff will want to hear about the sale from you rather than from rumour.

Telling HMRC, Companies House, lenders and landlords

• HMRC (sole traders): tell HMRC you’ve stopped trading and file a final Self Assessment return. If you’re VAT-registered, either cancel the registration within 30 days or arrange for it to transfer to the buyer. Close your PAYE scheme if you were an employer.
• Companies House (share sales): report director resignations and appointments, and any change in people with significant control. Since 18 November 2025, new directors must verify their identity with Companies House, so the buyer’s incoming directors need to do this in good time.
• Lenders: if you’ve personally guaranteed a business loan or overdraft, make sure the sale agreement releases you from it at completion. Otherwise, you can remain liable for debts of a business you no longer own.
• Landlords: transferring a lease usually needs the landlord’s consent. In a share sale, check the lease for change-of-control clauses.
• Customers, suppliers and licensing bodies: some contracts can be ended if ownership changes, and some licences are personal to you, so they don’t move with the business.

What most people get wrong

These are the errors that tend to cost sellers the most money, and they’re rarely about paperwork.

Negotiating the price instead of the proceeds. Take an offer of £650,000 with £250,000 dependent on an earn-out, and compare it with £580,000 in cash at completion. The first sounds bigger, but the second may leave you better off, with less risk. Always compare offers on what you’d keep after tax, and on when the money actually arrives.

Losing BADR by accident in the final two years. The conditions have to hold for the full two years before the sale. Two common slip-ups: resigning as a director too early to “ease out” of the business, and letting a new investor’s shares dilute your holding below 5%. Either can break the conditions, and the damage only shows up at the tax return.

Staying indispensable until the last minute. Owners often plan to hand over relationships “after the sale”. But buyers price in owner dependency up front, often through a lower multiple or a larger earn-out. Handing over key relationships a year early usually pays for itself.

Forgetting personal guarantees. These rarely come up in negotiations unless you raise them, and they can outlast your ownership by years.

Common mistakes when selling a business

1. Telling staff or customers too early. A leak before the deal is agreed can unsettle your team and your clients, and weaken your hand if the sale falls through.
2. Taking your eye off trading. Due diligence absorbs time. Delegate the sale process where you can, so the monthly numbers don’t dip.
3. Granting exclusivity too soon. Once you agree to talk to only one buyer, your leverage falls. Keep exclusivity short and tie it to clear milestones.
4. Using a generalist solicitor. Sale agreements, warranties and indemnities are specialist work. A corporate solicitor who handles business sales regularly is worth the fee.
5. Forgetting the cost of selling. Legal, accountancy and broker fees add up. They reduce your taxable gain, but they still come out of your proceeds.
6. Leaving personal spending in the accounts. It makes profit harder to normalise, invites awkward questions and can knock confidence in every other number you present.

Practical steps to take this month

You don’t need a buyer to make progress. Each of these takes an afternoon or less.

1. Check your BADR clock. Note the date you started trading, or became a director, and confirm your shareholding is at least 5%. Then work out the earliest sale date that keeps you inside the two-year rule.
2. Read your last three years’ accounts as a buyer would. List every figure you’d need to explain, from one-off costs to your own salary.
3. Write down the relationships only you hold. Pick one key customer or supplier and start introducing a colleague.
4. Review your lease and top contracts. Look for assignment or change-of-control clauses that could slow a sale.
5. Book a tax review. Ask for your likely net proceeds under at least two routes before you speak to any buyer.

Frequently asked questions

How much tax will I pay when I sell my business?

For 2026/27, gains on a business sale are usually taxed at 18% within your unused basic rate band and 24% above it, after a £3,000 allowance. If you qualify for Business Asset Disposal Relief, qualifying gains are taxed at 18% up to a £1 million lifetime limit. Companies selling assets pay Corporation Tax instead.

How long does it take to sell a business?

There’s no fixed timetable. Finding a buyer, agreeing heads of terms and completing due diligence usually takes months rather than weeks. Preparation should start much earlier: Business Asset Disposal Relief needs its qualifying conditions met for two years before the sale, so owners hoping to claim it should plan at least two years ahead.

Should I sell shares or assets?

Sellers usually prefer a share sale because they pay Capital Gains Tax once, often with Business Asset Disposal Relief, and the company’s liabilities go with it. Buyers often prefer an asset sale so they can pick what they want and leave historic risks behind. Sole traders can only sell assets because they have no shares.

How do I work out what my business is worth?

Many small businesses are valued on adjusted profit multiplied by a figure that reflects sector, size and risk. Buyers first “normalise” profit by replacing the owner’s pay with a market salary and removing personal or one-off costs. Asset-based valuations suit property-heavy or loss-making firms. An independent valuation gives you a realistic starting point.

Can I sell my business to my employees?

Yes. The main tax-advantaged route is an Employee Ownership Trust, which buys a controlling stake on employees’ behalf. For sales on or after 26 November 2025, only 50% of the seller’s gain is exempt from Capital Gains Tax, and Business Asset Disposal Relief cannot be claimed on the taxable half, giving an effective rate of 12% for higher-rate taxpayers.

Do I have to tell my staff I’m selling?

Yes, in most asset sales. TUPE usually moves employees to the buyer on their existing terms, and both employers must inform, and sometimes consult, staff representatives before the transfer. In a share sale the employer stays the same company, so TUPE doesn’t apply, although good practice and any contract terms still shape what you tell people.

Do sole traders pay Capital Gains Tax when they sell?

Yes. Sole traders pay Capital Gains Tax personally on gains from selling chargeable business assets such as goodwill or premises. Business Asset Disposal Relief can give a flat 18% rate if you’ve owned the business for at least two years. Stock sold as part of the deal is normally treated as trading income instead.

The bottom line

Selling a business rewards the owners who start early. Most of what protects your price, such as clean accounts, a team that can run without you and a BADR position you’ve actually checked, has to be in place before a buyer ever sees your numbers. The sale itself is the short part.

If a sale is on your horizon, the most useful thing you can do now is have your likely net proceeds modelled under two or three routes, before a buyer’s offer frames the conversation. The team at Eternity Accountants can help with Capital Gains Tax planning support when you’re ready.

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