Sale structure comparison

Because the two headline figures aren't like for like. Route A shows the cash in your hands after capital gains tax. Route B shows your share of the cash left in the holding company, which hasn't yet been taxed on you personally. So route B shows what's available to reinvest, not what you could spend. If you want the money personally, compare route A with the route B dividend figure instead, and talk to us about other ways of extracting it.

If you say your gain qualifies, it taxes gains up to your unused £1m lifetime limit at 18%. Those gains use up any basic rate band you have left first. The rest of the gain is taxed at 18% within any remaining basic rate band and 24% above. The £3,000 annual exempt amount is set against the gain that doesn't get BADR first, because that saves the most tax.

Because from 6 April 2026 the BADR rate is 18%, the same as the lower main rate of capital gains tax. BADR now saves tax only on gains that would otherwise be taxed at 24%, so the most it can save is £60,000 on the full £1m limit. On a large sale, most of the gain is taxed at 24% either way, which is one reason route B can look so different.

Usually what you originally paid for, or subscribed for, your trading company shares. When a holding company is inserted by a share-for-share exchange, the new holding company shares are treated as the same asset as the old ones, so your base cost and acquisition date carry across. For founders who subscribed for a few pounds of shares, that's why the default is £100. Enter your own share of the base cost, not the whole company's.

Because if the substantial shareholding exemption applies, the holding company pays no corporation tax on its gain, so its base cost makes no difference to the result. If SSE doesn't apply, the calculator charges corporation tax at 25% on the sale price less the holding company's base cost in the trading company. That base cost can differ from your own personal base cost, so it needs confirming before you rely on the figure.

It shows what you'd keep if the holding company paid your whole share of the proceeds to you as one dividend in the same tax year as the sale, with your other income. Most of it is taxed at 39.35%, so the figure is usually well below route A. It's there to show that route B isn't a way to take cash personally at low tax. Paying it out over several years, or other routes, can change the answer.

Because whether a liquidation gives capital treatment depends on facts the calculator can't see. A distribution in a winding up is generally treated as capital, which could bring capital gains tax rates instead of dividend rates. But anti-avoidance rules can tax liquidation proceeds as income in some cases, and BADR depends on the holding company's status. That needs looking at on your facts before you choose a route, so the calculator leaves it out.

Enter the sale price for 100% of the trading company and 50 in 'Your share of the group'. The calculator works out your share of the price for route A, and your share of the holding company's cash for route B. Enter your own base cost, your own income and your own BADR history. Each shareholder should run it separately, because the personal tax depends on each person's figures.

Your other taxable income for the tax year of the sale, such as salary, dividends, rent and pension income, before the gain. It decides how much of your basic rate band is left, which sets how much gain is taxed at 18% rather than 24%. It also decides how the route B dividend is taxed. Someone with income above £50,270 has no basic rate band left, so most of the gain is taxed at 24%.

No. It assumes the whole price is paid in cash on completion. Loan notes, earn-outs and deferred payments are taxed differently, and the timing of tax can change: some gains are taxed when the shares are sold even though the cash arrives later, and some can be deferred. Price adjustments, warranties and costs are also left out. If your deal has these features, use the calculator only for the cash part.

Yes. It uses one price for 100% of the trading company in both routes, and assumes your holding company shares are worth the same, because the holding company has nothing else. In practice buyers often prefer one route. Buying the trading company from the holding company leaves behind any cash, property or history in the holding company, while buying the holding company takes on everything in it. That can affect the price.

The substantial shareholding exemption applies when the holding company has held at least 10% of the trading company for 12 months in the six years before the sale and the trading company has been trading throughout. Our SSE checker walks through those conditions. If you're unsure, run the comparison both ways: the difference shows what's riding on SSE, which tells you how much effort to put into confirming it.

Yes. Choose 'Yes' for BADR and enter the gains you've already claimed relief on, including any Entrepreneurs' Relief claimed before April 2020. The calculator reduces your £1m lifetime limit by that amount and gives BADR only on what's left. If you've used the whole £1m, the gain is taxed at 18% and 24% as if BADR didn't apply. Check past tax returns if you're unsure what was claimed.

No. Route B shows the cash in the holding company on the day of the sale. After that, the holding company pays corporation tax on its interest and investment returns, and if it mainly holds investments it can become a close investment-holding company paying 25% on all its profits. Its shares are also unlikely to qualify for Business Relief from inheritance tax once the trade has gone. Income tax arises whenever cash is paid out to you.

Because in route B the holding company is the seller, so corporation tax is charged on the company's whole gain. The calculator then shows your percentage of what's left, and your share of the corporation tax. In route A each shareholder sells their own shares and pays their own capital gains tax, so the calculator starts with your share of the price and your own base cost.