The basic shape

When you sell shares in your company, you have a capital gain: what you sold for, minus what the shares cost you. Most founders subscribed for their shares at £1 each, so the cost is nominal and nearly the whole price is gain.

From the gain you deduct the annual Capital Gains Tax allowance, £3,000 for 2026/27. The rest is stacked on top of your other income for the year. What fits inside your unused basic rate band is taxed at 18%; everything above at 24%.

Worked example

You sell your company for £400,000. The shares cost you £100. Gain: £399,900. Less the £3,000 allowance: £396,900 taxable.

• With Business Asset Disposal Relief: all of it at 18% = £71,442
• Without relief: a slice at 18% up to the top of your basic band, the rest at 24%. For someone with a £30,000 salary, the basic band has £20,270 left in it, so about £3,650 at 18% and £90,390 at 24%, roughly £94,040 in total

The relief is worth about £22,600 on this sale. Whether you qualify is the subject of the next answer, but the headline conditions are a trading company, at least 5% of the shares, and two years as an officer or employee.

The other way to sell: assets

Sometimes the buyer wants the trade and assets, not the company. Then the company sells its customer list, equipment and goodwill, pays Corporation Tax on its gains, and you are left holding a company full of cash. Getting that cash out is taxed again: as dividends, or as a capital distribution if you wind the company up. Two layers of tax are why sellers usually prefer a share sale, and buyers sometimes prefer assets, which is where the negotiation starts.

Timing and payment

Capital Gains Tax on shares goes through Self Assessment, due by 31 January after the tax year of the sale. A deal that completes on 5 April instead of 6 April moves the tax bill forward a full year.

Sources

All pages checked 20 October 2026.

• Capital Gains Tax rates: https://www.gov.uk/capital-gains-tax/rates
• Business Asset Disposal Relief: https://www.gov.uk/business-asset-disposal-relief
• Self Assessment deadlines: https://www.gov.uk/self-assessment-tax-returns/deadlines

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