Business Sale CGT Calculator

BADR (formerly Entrepreneurs' Relief) reduces CGT to 10% on qualifying business disposals, up to a lifetime limit of £1 million. To qualify: you must own at least 5% of shares, be an employee or officer for 2+ years, and the company must be a trading company.

With BADR: 10% on gains up to £1 million lifetime. Without BADR: 18% (basic rate taxpayers) or 24% (higher rate) from April 2025. Note: CGT rates on business assets were significantly increased in the October 2024 Budget.

The lifetime limit for BADR is £1 million of gains at 10%. If you've previously claimed BADR on other disposals, those reduce the remaining lifetime allowance. Gains above £1 million are taxed at standard CGT rates (18–24%).

For seller: share sale typically produces CGT (10–24%). Asset sale may produce income tax on trading profits plus CGT. Generally, sellers prefer share sales for tax efficiency. Buyers prefer asset sales (they get a fresh cost base for capital allowances). This creates a common negotiating tension.

Deductible costs: solicitor fees for the sale transaction, accountancy fees for sale preparation, financial adviser fees, survey/valuation costs, advertising the business for sale, and any directly attributable enhancement expenditure. General ongoing business costs are not deductible.

Earn-out payments (future payments contingent on business performance) are taxed as CGT at point of receipt. If structured as employment income (e.g. tied to your continued employment), they may be taxed as income tax instead. Structure carefully with tax advice.

Yes — report the gain on Self Assessment (SA108 Capital Gains Summary) in the year of disposal. For gains above £50,000 or total proceeds above £50,000, report even if below CGT threshold. File BADR claim on SA108 to access the 10% rate.

Selling a partnership interest follows similar CGT rules. Each partner has their own base cost (initial capital + retained profits). Goodwill may be treated differently. Partnership agreements often contain right of first refusal clauses affecting sale process.

Goodwill is a chargeable asset for CGT. If the company built goodwill organically (not purchased), the base cost is £0 — the entire goodwill value is a chargeable gain. BADR may apply to reduce the rate to 10%.

You can't sell a trading business through a SIPP, but you may be able to hold commercial property in a SIPP and benefit from tax-free rental income and CGT-free disposal. Consult a pension specialist for property-related business sale strategies.

Under TUPE (Transfer of Undertakings Protection of Employment) regulations, employees automatically transfer to the buyer with their existing terms and conditions preserved. Failure to follow TUPE procedures can result in employment tribunal claims.

Typical timeline: 3–6 months from instruction to completion for smaller businesses. Larger transactions take 6–12+ months. Key stages: preparation (accounts, legal disclosure), marketing/finding buyer, heads of terms, due diligence (8–12 weeks), legal completion.