Transaction Tax

Transaction tax advice is specialist tax help on the sale, purchase or transfer of a business. It covers how a deal is structured, which reliefs apply, how the price is paid, what you promise in the sale agreement and what HMRC clearances are worth seeking. The aim is to make tax decisions deliberately and early, rather than discovering them in the final weeks of a deal.

Before you agree heads of terms. By then the price mechanism and the broad structure are usually fixed, and several tax options have already gone. For a sale, planning ideally starts well before you go to market, because some reliefs depend on conditions you must meet for two years. For a purchase, speak to us before you make an offer.

Yes. We advise sellers, buyers, management teams buying their own business, and investors backing a deal. Because we see every side, we can anticipate what the other party will ask for and which tax terms are normal. We do not advise both sides of the same deal, and we tell you at the start if there is a conflict.

The four routes we compare are a sale to a trade buyer or investor, a management buy-out, a sale to an Employee Ownership Trust, and a company buying back its own shares from a departing owner. Each has a different tax result, a different level of certainty and a different effect on the people left behind, so they are worth comparing on after-tax numbers.

For 2026/27 the main capital gains tax rates are 18% within the basic rate band and 24% above it, after a £3,000 annual exempt amount. Business Asset Disposal Relief charges 18% on the first £1m of qualifying gains in your lifetime. A sale to an Employee Ownership Trust relieves half the gain. Which relief fits depends on your holding, your role and the type of deal.

Sellers usually prefer to sell shares, because the gain is taxed once, in their hands, and reliefs can apply. Buyers often prefer assets, because they can leave history behind and may get tax deductions on what they buy. The right answer depends on the business, the buyer and the price. We model both so the negotiation is based on numbers.

In a management buy-out, a small team buys the business, usually through a new company funded by debt, investors and future profits. In a sale to an Employee Ownership Trust, a trust holds the shares for all employees. The tax treatment is different for the seller, the funding works differently and the effect on who owns the business is quite different.

Often, yes. HMRC runs advance clearance procedures for several types of transaction, including share exchanges, transactions in securities and company purchases of own shares. HMRC must respond to the main statutory clearances within 30 days of a complete application. We apply for them where the certainty is worth more than the time it takes.

The tax usually depends on how the later payments are classified. Fixed deferred consideration is generally taxed in the year of sale, although you can sometimes ask to pay the tax by instalments. Earn-outs are valued and taxed at completion, with later payments compared against that value. We structure these terms with the tax in mind before the contract is signed.

No. Capital gains tax is charged on the gain, which is the sale proceeds less what the shares cost you and allowable expenses. If you started the company yourself, your original cost may be very small, so most of the proceeds can be gain. Reliefs, losses and the annual exempt amount then reduce the taxable amount.

Quite significantly. While you own trading company shares, Business Relief can reduce or remove inheritance tax on them. When you sell for cash, that relief is usually lost from the date of a binding sale contract, and the proceeds become fully exposed to a 40% charge. Sale planning and family planning should be done together.

Most deals take between three and nine months from the first serious offer to completion, though that varies widely. Tax work runs alongside the legal and commercial work. The tax planning that makes the biggest difference, such as checking relief conditions or tidying the structure, can take longer, so it is best started before the process begins.

Have a clear picture of who owns the shares, how long you have held them, what roles shareholders play, and whether the company has surplus cash or non-trading assets. Gather recent accounts and tax returns, and note any open HMRC matters. We can review this with you first, so the buyer meets a business that is tax-ready and you know your position.

They are promises in the sale agreement about the target's tax position. Warranties say that stated facts are true. Indemnities say that the seller will pay for a specific tax problem if it arises. Buyers want broad cover. Sellers want limits on time and amount. Negotiating them well can protect a seller from open-ended claims after completion.

We do not draft legal agreements, because that is the job of your lawyers. We do review and negotiate the tax terms of the documents, such as the tax covenant, warranties, price adjustment and any share-for-share or earn-out provisions. We work alongside your lawyers and corporate finance advisers, and your relationship with them stays intact.

Yes. Our Business Exit Calculator lets you compare what you might keep from a sale, a management buy-out and a sale to an Employee Ownership Trust, using current rates. It is a good starting point for a conversation, not a final answer, because relief conditions, deal terms and your wider position all affect the real figure.

Timing and residence can change the result a great deal, and mistakes are costly. Gains can be taxed in the UK even after you leave if you return within five years, and the date of an unconditional contract is usually the date of disposal. Residence has to be planned well before contracts are signed, and we can work with you on it.

Yes, and we prefer to. Accountants and lawyers know the business and the contract. We bring a deal-tax specialist view on top, and you keep your existing relationships. Where a deal is led by a corporate finance firm, we work to their timetable and make sure the tax advice reaches the negotiating table when it is needed.

No. The first call is free and without obligation. We will ask what you are planning, what stage you have reached and which dates matter, then tell you plainly what we would look at first and which decisions cannot wait. If a deal is moving quickly, we will say so, prioritise accordingly and give you a clear list of next steps.