Key takeaways
- Selling business assets such as premises, goodwill or shares in your company can create a capital gain taxed at 18% or 24% for individuals.
- Business Asset Disposal Relief taxes qualifying gains on selling a business or your company shares at 18%, up to £1 million over your lifetime.
- Rollover relief defers the gain if you reinvest the proceeds in new business assets within the time limits.
- Gift holdover relief defers the gain if you give business assets away, and incorporation relief if you transfer a business to a company for shares.
- Companies pay Corporation Tax, not CGT, on their own gains; plant and machinery is usually dealt with through capital allowances.
When business owners sell, give away or reorganise their businesses, Capital Gains Tax (CGT) is often the largest tax at stake. The system has several reliefs designed to reduce or postpone it, but each has conditions. This guide is an overview; follow the links for the detail on each relief.
Which assets and which tax
| Owner | Typical business assets | Tax on gains |
|---|---|---|
| Sole trader or partner | Goodwill, premises, land, fixtures, shares in a partnership | CGT for the individual |
| Shareholder in a company | Shares in the company; assets owned personally and used by the company | CGT for the individual |
| Company | Premises, investments, shares in subsidiaries | Corporation Tax on chargeable gains |
For individuals, gains are taxed at 18% within the remaining basic rate band and 24% above it in 2026/27, after the £3,000 annual exempt amount. Companies pay Corporation Tax at 19% to 25% on chargeable gains, and most company goodwill and intellectual property is taxed under the intangible assets rules instead.
Plant and machinery on which capital allowances were claimed is normally dealt with through the capital allowances system on sale (a balancing charge or allowance), and a gain only arises if it is sold for more than it cost.
The main reliefs
Business Asset Disposal Relief
Taxes qualifying gains at 18% (from 6 April 2026) instead of 24%, up to £1 million over your lifetime. It applies when you sell all or part of a business you have owned for two years, or shares in your trading company where you work and hold at least 5%. See Business Asset Disposal Relief.
Rollover relief
If you sell assets used in your trade, such as premises, and reinvest the proceeds in new qualifying assets between one year before and three years after the sale, the gain can be deferred by deducting it from the cost of the new asset. See rollover relief.
Gift holdover relief
If you give away business assets or shares in an unquoted trading company, or sell them for less than market value, the donor and recipient can jointly claim to hold over the gain, so the recipient takes on the donor’s base cost. Common for passing a family business to the next generation. See gift holdover relief.
Incorporation relief
When a sole trader or partnership transfers a whole business, with all its assets except cash, to a company in exchange for shares, the gain is deducted from the base cost of the shares. From 6 April 2026 you must claim this relief on your return; it no longer applies automatically. See incorporation relief.
Employee Ownership Trusts
Sales of a controlling interest to an Employee Ownership Trust used to be entirely free of CGT. From 26 November 2025 the relief covers only 50% of the gain.
Goodwill
Goodwill is the value of a business beyond its identifiable assets: its reputation, customer base and location. For a sole trader selling the business, goodwill is often the main asset and usually qualifies for Business Asset Disposal Relief. Goodwill created by the trader has a nil base cost, so the whole value is a gain. When a business is transferred to a company, the value placed on goodwill needs careful support, because HMRC will challenge inflated values.
Example: a sole trader selling up
Ian sells his plumbing business in 2026/27 after 12 years. He receives £180,000 for goodwill (base cost nil) and £60,000 for his workshop, which cost £35,000. He is a higher rate taxpayer and qualifies for BADR on the whole disposal.
| Asset | Gain |
|---|---|
| Goodwill | £180,000 |
| Workshop | £25,000 |
| Total | £205,000 |
| Less annual exempt amount | (£3,000) |
| Taxable gain | £202,000 |
| CGT at 18% with BADR | £36,360 |
Without BADR, the tax at 24% would be £48,480.
Timing and reporting
- Gains are taxed in the tax year of the disposal, which for a sale contract is usually the date of exchange, not completion, if the contract is unconditional.
- Report on your Self Assessment return; tax is due by 31 January after the tax year.
- Deferred consideration, such as an earn-out, can be complex; take advice before agreeing the structure.
Frequently asked questions
Do I pay Capital Gains Tax when I sell my business?
Usually, on the gain on goodwill, premises and other chargeable assets. Business Asset Disposal Relief can reduce the rate on qualifying gains to 18%.
What is the CGT rate on business assets in 2026/27?
18% within your basic rate band and 24% above it, or 18% on gains qualifying for Business Asset Disposal Relief.
Can I defer CGT by buying new business premises?
Yes, through rollover relief, if you reinvest in qualifying assets within one year before or three years after the sale.
Do I still get incorporation relief automatically?
Not for transfers on or after 6 April 2026. You must now make a claim on your tax return.
Sources
Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance in October 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.