Exiting Your Company: BADR and Gift Hold-Over Relief

The key reliefs depend on conditions being met for two years before the sale. Set a target date and work back from it. Decide whether you will stay on as a consultant, who will succeed you, whether family will take over, whether you are selling shares or assets, and how the price will be paid (cash, deferred payments or earn-out). Take advice before you talk to buyers.

BADR, formerly Entrepreneurs' Relief, taxes qualifying gains at 18% for 2026/27, against the 24% higher rate, on up to £1 million of lifetime gains. For shares in your personal trading company, for two years before the sale you must hold at least 5% of the ordinary shares and votes, be entitled to 5% of profits and assets (or 5% of sale proceeds), and be an officer or employee. Example: a £400,000 gain costs £72,000 with BADR instead of £96,000. Spouses and civil partners each have their own £1 million limit; transferring shares to a spouse at least two years before the sale can double the relief.

Giving shares in an unlisted trading company, or business assets, to your children normally triggers capital gains tax as if you had sold at market value. Gift hold-over relief defers that gain: the recipient takes over your original base cost and pays the tax only when they eventually sell. Example: shares you subscribed for at £10,000, now worth £150,000, can be gifted with no tax now; your child's base cost is £10,000. Both of you must sign the claim.