Selling your business

Some of the tax reliefs on a sale have conditions that have to be met for the two years before the sale. Once heads of terms are agreed, the shape of the deal is largely fixed.

8 min read · 24 September 2026 · Written for business owners

Two years

before the sale, the period for which the conditions for business asset disposal relief have to be met

gov.uk, Business Asset Disposal Relief

Why timing matters

The earlier your accountant knows a sale is possible, the more can still be changed.

When to tell your accountant

Tell your accountant that a sale is possible if any of these apply:

You are in your late fifties or sixties and nobody inside the business is lined up to take over.
You have had an approach from a buyer.
You have started preparing the accounts for a buyer to look at.
You have thought about selling, even without a date in mind.

What has to be in place before the sale

18%

business asset disposal relief on qualifying gains, for disposals from 6 April 2026

£1 million

the lifetime limit for business asset disposal relief

18% and 24%

the main capital gains tax rates

gov.uk, Business Asset Disposal Relief; gov.uk, Capital Gains Tax rates.

Business asset disposal relief.

Business asset disposal relief taxes qualifying gains at 18%, up to a lifetime limit of £1 million, for disposals from 6 April 2026 (gov.uk, Business Asset Disposal Relief). The main capital gains tax rates are 18% and 24% (gov.uk, Capital Gains Tax rates). The conditions have to be met for the two years before the sale. They cover your shareholding and voting rights, whether you are an officer or employee of the company, and whether the company is a trading company (gov.uk, Business Asset Disposal Relief).

Trading status.

HMRC treats a company with substantial non-trading activities or assets as not trading, and uses 20% of turnover, assets, expenses or time as its marker (HMRC Capital Gains Manual CG64090). Surplus cash and let property can raise the question. Dealing with them takes time.

Pension funding.

The company can make employer pension contributions while it is trading. After the sale the company is no longer yours, so that route closes.

The shape of the deal.

Cash on completion, deferred payments, an earn-out and loan notes are each taxed at different times and sometimes at different rates. Your accountant can explain the differences before you agree heads of terms.

A rough timetable

Three years out.: Every option is open. Shareholdings, trading status, pension funding and the shape of the business can all still be changed.
Two years out.: The qualifying period for business asset disposal relief can still be met. Employer pension contributions can still be made from a trading company. Any non-trading assets can still be dealt with.
One year out.: The accounts a buyer will see are largely fixed. Some things can still be changed.
Three months out.: The deal is being completed and the tax position is largely set.

What the money has to do afterwards

After the sale, four things need working out.

What the money has to do. The proceeds may have to fund thirty years of income, and possibly care costs. A financial adviser can work out what income the sum would produce and whether it is enough.
What you will do with your time. Plans for the years after the sale affect how much income the money has to produce, and when.
The earn-out. If the deal includes an earn-out, you work for the buyer for a period. That changes your income and your tax position for those years.
The family. Shares in a trading company can qualify for business property relief. Cash does not qualify. From 6 April 2026 business property relief is 100% on the first £2.5 million of qualifying business and agricultural property in an estate and 50% on the value above that, which is an inheritance tax rate of 20% on the excess (Finance Act 2026).

Questions and answers

Do I need to tell my accountant before I have a buyer?

Yes. The two-year conditions for business asset disposal relief and any change to the company’s trading status need time.

Does an earn-out change my tax position?

It can change how much tax you pay and when. Your accountant can explain the treatment before you agree the structure.

What about the cash sitting in the company?

It can affect whether the company still counts as a trading company, which affects the relief.

How much will I need afterwards?

That depends on your spending, your other assets and how long the money has to last. A regulated financial adviser can work it out with you.

What to do next

If a sale is possible within five years, tell your accountant now.
Planning what the proceeds have to do afterwards is regulated advice. A regulated financial adviser looks at that, and your accountant can introduce you.

This sheet explains how the rules work. It is not advice, and it does not take your circumstances into account. Your accountant can talk it through with you and can introduce you to a regulated financial adviser.