Can I Get Relief If I Sell My Business or Shares

Understanding Capital Gains Tax on business sales

When you sell all or part of a business, or shares in a company, any profit you make is usually subject to Capital Gains Tax. The gain is the difference between what you paid for the asset and what you sell it for, after deducting allowable costs such as legal fees, professional valuations, or improvement costs.

For the 2025 26 tax year, CGT rates for most business disposals are:

10% for basic rate taxpayers (if total income and gains remain within the basic rate band)

20% for higher and additional rate taxpayers

However, there are special reliefs that can reduce these rates further or delay payment entirely.

Business Asset Disposal Relief (formerly Entrepreneurs’ Relief)

The most well-known relief for business owners is Business Asset Disposal Relief (BADR). It reduces the CGT rate to 10% on qualifying gains of up to £1 million over your lifetime.

Who qualifies for BADR

You can claim BADR when selling all or part of your business if you:

Are a sole trader or business partner

Have owned the business for at least two years up to the date of sale

Are selling all or part of the business as a going concern (not just individual assets)

If you are selling shares in a company, you can also qualify if:

The company is a trading company (or part of a trading group)

You have owned at least 5% of the ordinary shares and voting rights for two years

You have been an employee or office holder (such as a director) for at least two years before the sale

Example

Suppose you sell your business for £800,000 after owning it for five years. If you qualify for BADR, you would pay CGT at 10%, resulting in a tax bill of £80,000 instead of £160,000 at the standard 20% rate.

Because the £1 million BADR lifetime limit is cumulative, you can use it across multiple qualifying disposals until the limit is reached.

Selling shares in a company

If you sell shares in your company, the same BADR rules apply, provided you meet the shareholding and employment conditions. This can include shares acquired through an employee share scheme, as long as you meet the two-year ownership rule.

Enterprise Management Incentive (EMI) shares

If you hold shares under an approved Enterprise Management Incentive (EMI) scheme, you may also qualify for BADR even if you own less than 5% of the company.

To qualify:

You must have held the EMI shares for at least two years.

You must have been an employee of the company during that time.

This makes EMI schemes particularly valuable for small company directors and employees who help grow the business.

Rollover Relief

If you sell a business asset such as land, buildings, or equipment and reinvest the proceeds into a new qualifying business asset, you may be able to delay paying CGT through Rollover Relief.

To qualify, the replacement asset must be purchased within three years of the sale (or up to one year before the sale). The gain is then “rolled over” and deducted from the cost of the new asset, postponing the tax until you sell the new one.

This relief helps business owners reinvest without an immediate tax burden, supporting business growth and continuity.

Example

If you sell a company warehouse for £400,000 with a £100,000 gain and buy a new warehouse for £450,000 within the timeframe, you can roll over the £100,000 gain. The new warehouse will have a base cost of £350,000 for CGT purposes, deferring the tax until it is sold.

Incorporation Relief

If you transfer your sole trader or partnership business into a limited company, you may qualify for Incorporation Relief.

This relief allows you to defer the CGT due on the business assets transferred in exchange for shares in the company. The gain is not taxed at the time of incorporation but is instead rolled into the value of the shares.

To qualify:

You must transfer the whole business as a going concern

You must receive shares in the company as full or partial payment for the transfer

This is useful for business owners turning their growing enterprise into a company without triggering a large immediate tax bill.

Holdover Relief for gifts

If you gift business assets or shares rather than selling them, you may qualify for Gift Holdover Relief.

This relief allows you to defer the gain until the recipient sells the asset in the future. The recipient effectively “inherits” your original cost base, and the CGT is postponed.

Holdover Relief is often used when passing a business to a family member or into a trust.

To qualify:

The asset must be used for trading purposes, or

The shares must be in a trading company (not an investment company)

This relief can be particularly valuable for succession planning and family business transfers.

Investors’ Relief

Investors’ Relief also provides a 10% CGT rate on qualifying share sales but applies to external investors rather than company directors.

To qualify:

The shares must be newly issued by an unlisted trading company

They must be held for at least three years before disposal

You must not be an employee or director of the company during that period

Investors’ Relief also has a lifetime limit of £10 million, offering significant potential savings for angel investors and private backers.

Claiming reliefs

To claim most forms of business disposal relief, including BADR, Holdover Relief, or Rollover Relief, you must notify HMRC within the relevant time limits — usually by the 31 January following the tax year in which the disposal took place.

Claims can be made through your Self Assessment tax return or by submitting a separate claim form if required. Keep detailed records of purchase and sale dates, valuations, and professional fees to support your claim.

Combining reliefs

In some situations, you may be eligible for more than one relief. For example, you could claim BADR on the sale of a business and Rollover Relief on the reinvestment of part of the proceeds into another asset.

However, each relief has its own conditions and cannot always be combined. Taking professional advice before completing a sale ensures you make the most of the available options and avoid unintended tax liabilities.

Final thoughts

If you sell your business or shares, several tax reliefs can significantly reduce or defer your Capital Gains Tax bill. Business Asset Disposal Relief remains the most common and generous for owner-managers, but Rollover, Incorporation, and Holdover Relief can also offer valuable savings in the right circumstances.

The rules around eligibility are detailed, so it’s wise to plan ahead. With the right approach and proper timing, you can keep more of the proceeds from your hard work and reinvest them into your next venture or retirement with confidence.