Why sellers prefer shares

Sell the shares and the whole company, warts and all, goes to the buyer in one transaction. You pay Capital Gains Tax once, at 18% or 24%, or 18% across the board with Business Asset Disposal Relief on up to £1 million of lifetime gains. After completion you walk away.

Why buyers prefer assets

Buying assets means choosing the good bits: the customer list, the equipment, the brand, the stock. Anything not named in the agreement stays behind with you: old tax liabilities, disputes, awkward contracts. The buyer also starts with a clean company, free of whatever your company might have done before they owned it.

The double-tax problem with asset sales

The company sells its assets and pays Corporation Tax on the gains: 19% or 25% depending on its profits. The proceeds now sit in the company’s bank account, not yours. To get them out you pay again, either as dividends at up to 39.35% or as a capital distribution on winding up at Capital Gains Tax rates. Two layers of tax on the same money is why sellers push for shares.

The staff point

On an asset sale, employees usually transfer to the buyer automatically under TUPE, the Transfer of Undertakings regulations, on their existing terms. Buyers price this in. On a share sale the employer never changes, so nothing moves.

How it usually settles

Most small business sales land somewhere negotiated: a share sale with warranties and indemnities from the seller, or an asset sale with a price that reflects the seller’s extra tax. Know your own number before the conversation. If an asset sale costs you £20,000 more in tax, that is a £20,000 point in the negotiation.

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
• Corporation Tax rates: https://www.gov.uk/corporation-tax-rates
• Business transfers, takeovers and TUPE: https://www.gov.uk/transfers-takeovers

Photograph: Kampus Production, Woman Sitting among Cardboard Boxes and Writing on a Piece of Paper on a Desk with a Laptop, via Pexels (free to use under the Pexels Licence). Shown in black and white and darkened by Business Robot.

Menu background photograph: Thang Nguyen, Modern office building interior with glass atrium, via Pexels (free to use under the Pexels Licence). Shown in black and white and darkened by Business Robot.

Business Robot is Researched in Birmingham UK