Sell the trading company, or sell the group: choose the route that fits your plans.

It depends mainly on what you want to do with the money. If you want to reinvest, the holding company selling the trading company under the substantial shareholding exemption usually leaves more working capital, because no corporation tax is due and nothing is taxed on you until cash is paid out. If you want the cash personally, selling the holding company's shares, with capital gains tax at 18% and 24% and possibly Business Asset Disposal Relief, is often simpler and cheaper.

Usually the share sale of the holding company itself. Capital gains tax for 2026/27 is 18% on gains covered by Business Asset Disposal Relief, up to £1m per person, and 18% or 24% on the rest. If the holding company sells the subsidiary instead and then pays the proceeds out as dividends, the top dividend rate is 39.35%. Winding up the holding company can produce capital treatment, but anti-avoidance rules need checking first.

Because the gain can be exempt from corporation tax under the substantial shareholding exemption, and the owners can keep the parts of the group they want. Property, surplus cash, investments or a second business can stay in the holding company. The full sale price stays in the group to reinvest, and personal tax is deferred until money is taken out. It suits owners who intend to keep building or investing.

Many buyers prefer to buy just the trading company, because it is cleaner: the property, cash and anything else they do not want stays behind with the seller, and due diligence focuses on one company. Some buyers are happy to buy the holding company, particularly where the group has several trading subsidiaries they want together. The structure is negotiated, so it helps to know your preferred route before heads of terms are agreed.

They go to the buyer with the company, unless they are dealt with before completion. A buyer will usually reflect surplus cash in the price, but may not want property or investments at all. Taking them out before the sale has its own tax costs, and a dividend of surplus cash just before a sale is taxed at dividend rates. Planning this well before the sale gives more options and avoids last-minute compromises.

Not on that sale, because the seller is the company, not you. Business Asset Disposal Relief only applies to disposals by individuals and some trustees. The company's gain is dealt with under the substantial shareholding exemption instead. BADR may come back into play later if the holding company is wound up within three years of ceasing to be the holding company of a trading group, and the two-year conditions were met up to that point.

Possibly. Where a company stops being a trading company or holding company of a trading group, BADR can still apply to a disposal within the following three years, if the usual conditions were met throughout the two years before it stopped. A distribution in a members' voluntary liquidation is a disposal of your shares. The timing, the amount of cash reinvested and the anti-avoidance rule on winding ups all need checking.

Section 396B ITTOIA 2005 can tax a distribution in a winding up as a dividend instead of a capital gain. Broadly, it applies where you had at least a 5% interest in a close company, you or a connected person carry on a similar trade or activity within two years of the distribution, and a main purpose of the winding up is avoiding income tax. Owners who plan to start a similar business soon after a sale should take advice first.

Where part of the price depends on future performance and is paid in cash, the right to the earn-out is usually valued and taxed at completion, with later payments compared against that value. If the earn-out is linked to your continued employment, HMRC may treat it as employment income instead. Earn-outs paid in shares or loan notes of the buyer can sometimes defer the gain. The wording of the sale agreement matters.

Often, yes. Where the buyer issues loan notes as part of the price, the gain on that part can usually be deferred until the notes are repaid, depending on the type of loan note. The catch is that Business Asset Disposal Relief may then not be available when the gain is finally taxed, because the conditions are tested later. Elections can preserve BADR, so the choice should be made with figures in front of you.

This needs separate checking. The substantial shareholding exemption covers the holding company's gain on the shares, but a right to future payments can be a separate asset, and later payments above the value placed on it at completion may be taxed on their own terms. The answer depends on how the earn-out is drafted, so it should be reviewed alongside the sale agreement, not after completion.

Ideally at least a year before the sale, and earlier if you can. For the holding company to sell a subsidiary under the substantial shareholding exemption, it normally needs to have held the shares for 12 months. A holding company inserted before any buyer is in view is also much easier to explain under the main purpose test that now applies to share exchanges, and it gives time to tidy up cash and property.

Not in itself. Finance Act 2026 replaced the old commercial reasons test for share exchanges with a main purpose test for shares issued from 26 November 2025. HMRC's guidance says restructuring so that a later share sale qualifies for a relief is not caught where the relief's conditions are met throughout the relevant period after the restructuring. The closer to a sale it happens, the more carefully the purpose needs to be documented and cleared.

Sometimes, but compare the rates first. A pre-sale dividend is taxed at dividend rates of 10.75%, 35.75% or 39.35% for 2026/27, while a gain on selling the shares may be taxed at 18% with Business Asset Disposal Relief or 24% without. Paying out cash the buyer would otherwise pay for can therefore cost more tax. It can still make sense in some cases, so run the numbers.

It is a formal, solvent winding up. The directors make a statutory declaration of solvency in the five weeks before the shareholders resolve to wind up, a licensed insolvency practitioner is appointed, and the company's assets are paid out to the shareholders. Those distributions are not treated as dividends, so they are usually taxed as capital gains, subject to the winding-up anti-avoidance rule. It is often used after a holding company has sold its last trading subsidiary.

Normally the holding company, as the seller, gives the warranties and any tax indemnity in the sale agreement, although buyers sometimes ask the individual owners to stand behind them. Because the sale proceeds stay in the holding company, a buyer can see there is money available if a claim arises. Claim periods for tax warranties and indemnities are commonly four to seven years, which affects how much cash you may want to keep in reserve.

After selling its trading business, a holding company that mainly holds cash or investments is likely to be a close investment-holding company. That means it cannot use the 19% small profits rate or marginal relief, so its taxable profits, such as interest and gains, are taxed at 25%. Dividends it receives from most shareholdings are generally exempt. It may still be worthwhile, because the full sale price is working for you.

Yes. The £1m lifetime limit is per individual, so a husband and wife who each meet the conditions in their own right can each have up to £1m of gains taxed at 18% under Business Asset Disposal Relief. Each must hold at least 5% and be an officer or employee for the two years before the sale. For 2026/27 the relief saves up to £60,000 each compared with the 24% rate.

Our sale structure calculator compares a sale of your holding company's shares by the shareholders with a sale of the trading subsidiary by the holding company. It uses the 2026/27 capital gains tax, dividend and Business Asset Disposal Relief rates to show the tax on each route and how much cash ends up with you or stays in the company. It is a starting point for a conversation, not advice on your own facts.