Business asset disposal relief and the timing of your exit
The relief is still there, at a higher rate than before, and whether it applies depends on what is sold, by whom, and how the money reaches you.
The relief is still there, at a higher rate than before, and whether it applies depends on what is sold, by whom, and how the money reaches you.
Business asset disposal relief reduces the capital gains tax on a qualifying sale of a business or of shares in a trading company. Its rate went up on 6 April 2025 and again on 6 April 2026, and it remains subject to a lifetime limit of £1 million of qualifying gains. For a principal planning an exit, it matters which parts of the sale qualify.
This article describes how the relief works. It is not tax advice, and your own accountant needs to look at your structure before you agree anything.
In broad terms, relief can apply when you sell all or part of a business you run as a sole trader or partner, or when you sell shares in a trading company in which you hold at least five per cent of the shares and votes and work as an officer or employee. The conditions have to be met for at least two years up to the date of sale. Some disposals after a business has ceased also qualify, within a time limit.
The rules are detailed, and the answer for any one principal depends on facts the accountant has to check: the structure of the firm, who owns what, how long they have owned it, and whether the company counts as trading.
There are two common ways to sell an advice business. A buyer can buy the shares in your company, in which case you sell an asset you own personally. Or a buyer can buy the business and its assets from the company, in which case the company receives the money and you then have to get it out.
The tax on those two routes can differ significantly. In an asset sale, the company pays corporation tax on its gain, and you then pay tax again when the money is taken out as dividends, salary or on winding the company up. Whether business asset disposal relief helps at that second stage depends on how the company is closed and on conditions your accountant will check.
Under Securo, Equity & General acquires the assets under management at the exit. How that acquisition is structured, and therefore how the proceeds reach you, is agreed firm by firm. Raise the tax treatment early so the structure is set with it in mind.
Where part of the price is deferred, the tax position needs care. Depending on how the deferred part is structured, tax can fall due on money you have not yet received, or a later payment can be treated differently from the first. Your accountant should see the payment terms in draft, before they are agreed.
The £1 million limit is per person, across a lifetime. If you have claimed relief before, on an earlier business or a property, less of the limit may be left. Where a firm is jointly owned by a couple or by business partners, each owner who meets the conditions has their own limit. That is a reason to check who owns which shares well before a sale, because changing ownership shortly before a sale can mean the two-year conditions are not met.
The increases in the rate may tempt you to sell sooner. Speeding up a sale to save tax can cost more than it saves if the firm is sold before the file is in order, before clients have met the next adviser, or before the principal is ready to stop. A buyer reflects those things in the price.
Look at the tax and the value of the firm together. A slightly higher tax rate on a sale at full value can leave you with more than a lower rate on a sale that was hurried.
Under Securo the date of the exit is yours to choose. That gives your accountant room to plan around it, and time to fix anything in the ownership or structure that would stop the relief applying.
During a transfer, each client's ongoing fee depends on paperwork, platform processes and a service agreement the client has seen. Each needs checking before the transfer.
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Read itSteven Bates, Director of Advisory at Equity & General, takes the first call with every adviser. Ring him on 020 8396 0486 or send a short note about your firm.