How to Sell a Business in the UK?

Learn how to sell a business, from valuation to finding buyers, tax, legal steps, and notifying HMRC, including VAT and capital gains rules.

Selling a business is a major financial and legal decision, whether you’re retiring, moving on to something new, or simply cashing in on your success. It’s not just about finding a buyer—you’ll need to prepare thoroughly, get a proper valuation, and navigate complex tax and legal requirements.

Here’s a full breakdown of the steps involved in selling a business in the UK.

Preparing for the Sale

Before putting your business on the market, you need to get it in shape both financially and operationally.

1. Clean up the financials
Ensure your accounts are up to date and accurate. This means:

  • Finalised balance sheets

  • Clear profit and loss statements

  • Cash flow forecasts

  • Removing personal expenses from business accounts

2. Settle outstanding issues
Deal with any disputes, overdue taxes, or debts. Buyers will dig into your books during due diligence and any red flags can lower the price—or collapse the deal.

3. Streamline operations
A business that runs without the owner's constant input is more attractive. Create or update process manuals, employment contracts, and supplier agreements.

4. Identify what’s included in the sale
Are you selling the company itself (a share sale) or just its assets (an asset sale)? Will the brand name, customer lists, equipment, premises, and stock be included?

How to Get a Business Valuation

You can’t sell your business without knowing what it’s worth. There’s no one-size-fits-all formula, but common valuation methods include:

  • Earnings multiples: A multiple of your net profit or EBITDA (e.g. 3x annual profit)

  • Asset-based valuation: Calculating net asset value (useful for property-heavy businesses)

  • Discounted cash flow: Projects future cash flows and adjusts for risk

  • Comparable sales: Looking at similar businesses sold recently in your sector

It’s best to use a professional valuer, business broker, or accountant with experience in business sales. They’ll factor in goodwill, market trends, and industry risks.

How to Find Buyers and Market a Business for Sale

You can market the business privately or work with a business broker. Your approach depends on whether you want a quick sale, the highest price, or privacy.

Options for finding buyers include:

  • Specialist business-for-sale platforms (e.g. Daltons Business, Rightbiz)

  • Accountants and professional networks

  • Competitors or suppliers

  • Staff or management buyouts (MBOs)

  • Business brokers or corporate finance advisers

Prepare a professional Information Memorandum or sales pack detailing:

  • Company history

  • Financials

  • Client base

  • Growth potential

  • Staff structure

You’ll also want a non-disclosure agreement (NDA) in place before sharing sensitive data.

How to Negotiate a Business Sale

Negotiating a sale is a balance of value and terms.

  • Set a walk-away point and a realistic asking price

  • Be clear on what’s included and excluded (e.g. property, cash in bank)

  • Decide whether you’ll offer post-sale support or training

  • Agree on the deal structure: full upfront payment vs instalments or earn-outs

  • Expect a back-and-forth on valuation, warranties, and liabilities

Having an adviser to negotiate on your behalf can help keep things professional and objective.

Legal Considerations for Selling a Business

Legal documentation is critical. You’ll likely need:

  • Heads of Terms: A non-binding agreement outlining key deal points

  • Share Purchase Agreement (SPA) or Asset Purchase Agreement (APA)

  • Disclosure letter: Details known risks or liabilities to protect the seller

  • Warranties and indemnities: Seller guarantees about the state of the business

You’ll need a solicitor with experience in M&A (mergers and acquisitions) to ensure everything is watertight and legally compliant.

How to Notify HMRC of a Business Sale

You must inform HMRC when you sell a business. What you do depends on your setup:

  • Sole trader/partnership: Tell HMRC you’ve stopped trading by completing the Self Assessment and closing PAYE or VAT if registered.

  • Limited company: If selling shares, the company continues. If it’s an asset sale and you’re closing the business, you’ll need to:

    • File final accounts and a Company Tax Return

    • Deregister for VAT and PAYE

    • Notify Companies House if winding up

What Tax Will I Pay on the Sale of a Business?

The main tax is Capital Gains Tax (CGT) on the profit you make from the sale. You may qualify for:

  • Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) – This reduces the CGT rate to 10% on the first £1 million of lifetime gains if conditions are met.

You’ll need to:

  • Be a sole trader, partner, or shareholder

  • Have owned the business or shares for at least 2 years

  • Have been actively involved in the business

Shares, goodwill, and property can all be subject to CGT.

How Does It Work With VAT?

  • If you’re selling the entire business as a going concern (TOGC), VAT may not apply.

  • You must notify the buyer and both parties need to be VAT registered.

  • If it’s not classed as a TOGC, VAT may be chargeable on some assets (e.g. equipment or stock).

It’s essential to get professional VAT advice before finalising the sale terms.

Conclusion

Selling a business is more than finding a buyer. It’s a process that requires preparation, clear documentation, professional valuation, careful negotiation, and tax planning. With the right team in place—accountants, solicitors, and brokers—you’ll be better equipped to maximise the value of your business and exit smoothly. Always inform HMRC correctly, and make sure tax treatment is handled properly from start to finish.