Selling Your Business in the UK

Tax Liabilities & Profit Maximisation

I am selling my business- What are my Tax Liabilities and How do I maximize my Profits?

When you are selling your business as a sole trader or a partner you will have to pay Capital Gains Tax on any profits that you make.

On the other hand, you won't be paying CGT. If you run your business as a limited company and you make a gain on its sale instead you pay corporation tax.

In this blog we will discuss how you can make use of the reliefs available to you if you sell your sole trader or a partnership business to reduce your Capital Gains tax and therefore maximize your profits.

What is Capital Gains Tax

Capital Gains Tax is the tax on the profit when you sell something which has increased in value.

You have to pay capital gains if you make a profit when you sell( or dispose of) all or part of the business.

Annual Exempt Amount

There is an annual exempt amount available which is £12 300 you won't have to pay any taxes if your gain is within the annual exempt amount.

You will be able to utilize the annual exempt amount most efficiently if you sell or dispose of your business in parts.

What are the reliefs available to me if I am selling my business?

There are certain eligibility criteria for each relief and if you are eligible you can get the relief depending on your circumstances and you can save on your taxes by

● paying the reduced percentage of the taxes

● by delaying certain taxes that you pay for example capital gains tax

Let's look at the following reliefs available to you and see if you are eligible and we accountants in Croydon Can help you claim them .

Business Asset Disposal Relief:

You can pay the reduced amount of CGT(10 %)instead of the normal rates if the following applies to you

● You are a sole trader or a partner
● You have owned the business for at least 2 years.

Gift Hold Over Relief:

If you are just giving away your asset you won't be paying any taxes on it. Instead CGT will be paid when the person you gave your asset sells it.

You can claim this relief when you have used the business asset for business purposes as a sole trader or a partner.

Delaying the Payment of Capital Gains Tax:

You can claim incorporation Relief:

You can delay the payment of CGT if you transfer all your business and its assets in return for the shares in a company.

This is not actual selling, it is when you transfer your business to a company.

How do I claim

You do not have to claim incorporation relief you will get it automatically,

Business Asset disposal Relief:

You can claim this relief if you dispose of your assets and replace them with the new ones within 3 years of disposing of them.

If you are planning to sell your business and you need more advice on how to go about it and how to submit the the tax returns, please feel free to contact Taxaccolega and our team of expert accountant will be happy to help you,

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From 18 November 2025, UK law will require all company Directors and Persons with Significant Control (PSCs) to verify their identity with Companies House.

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Selling Your Business in the UK: Tax Liabilities & Profit Maximisation