Exit Tax Planning: Start With the Commercial Deal

One decision, not two separate projects

A proposed sale can look attractive in a valuation discussion and disappointing in a personal financial plan. The difference may be tax, but it may also be deferred consideration, professional costs, debt repayment or money needed to keep the business operating. Treating the tax calculation as an attachment to the sale process misses the wider issue: the owner needs to understand what becomes available, when it becomes available and what remains uncertain.

Start with a shared working model rather than a target tax rate. Give the commercial adviser, accountant and personal financial adviser the same assumptions about ownership, price, transaction structure and your continuing role. Each should identify what is known and what needs confirmation. The value-planning guide provides the wider framework; the practical task here is making the advice connect before negotiations narrow your choices.

Compare the money you can actually use

Separate cash at completion from amounts payable later and any shares you retain. A deferred payment is not equivalent to money in your account. An earn-out may depend on performance you no longer control. Retained equity may be valuable but unavailable for personal spending. Ask for a comparison that makes those distinctions visible rather than folding everything into a single optimistic proceeds figure.

Then identify the deductions and assumptions within each scenario. Fees, borrowing and the treatment of cash or working capital can all affect the outcome. The tax adviser should explain how the proposed consideration is analysed and whether payment timing creates a funding concern. This is especially important when the buyer changes an offer from cash to a mixture of cash, shares and future payments.

Use reliefs as questions, not promises

For qualifying disposals, Business Asset Disposal Relief has an 18% rate from 6 April 2026 and a £1 million lifetime limit. The rate was 14% for disposals from 6 April 2025 to 5 April 2026. Those figures are not an entitlement: eligibility conditions and previous use matter. Main Capital Gains Tax rates are 18% and 24%, with the applicable treatment depending on circumstances. Obtain an individual calculation rather than applying one rate to an entire headline price.

The same caution applies to choosing a route because someone describes it as tax-efficient. Employee ownership, management buyouts and family transitions have different commercial demands. For qualifying disposals to an Employee Ownership Trust on or after 26 November 2025, the relief applies to only 50% of the gain; the other 50% is chargeable to Capital Gains Tax. Conditions are strict, not every owner qualifies and an EOT does not guarantee market value. Where EOT relief under section 236H is claimed, Business Asset Disposal Relief and Investors’ Relief are not available on that disposal, including the chargeable gain. Take tax and legal advice on your own circumstances. A tax advantage cannot make an unaffordable payment plan sustainable or turn an unsuitable ownership arrangement into a good personal exit.

Put structure on the agenda before buyer commitments

A buyer seeking assets may be proposing something materially different from the share sale you had envisaged. The ownership of property, intellectual property or different trading activities can also affect what is being offered. Ask your advisers to map the assets and entities involved and explain how each credible transaction would work. Do not assume changing the structure is a quick administrative step.

Early planning gives time to investigate rather than creating permission to implement changes without advice. Moving assets, altering shareholdings or reorganising a group can have consequences of its own. Have the tax and legal advisers assess a proposed step together, including its commercial purpose and practical timetable. Record what must be true for the advice to hold, so those assumptions are not forgotten when the deal develops.

Keep every shareholder in the conversation

Co-owners may have different tax histories, cash needs and plans for continued involvement. One shareholder's acceptable outcome may not work for another. Establish those differences privately before presenting a united negotiating position. Otherwise a late discovery about personal proceeds can unsettle an agreement that appeared commercially sound. Shareholders should obtain advice appropriate to their own position rather than borrowing another owner's conclusion.

Family objectives need similar care. Retirement income, future gifts and longer-term ownership are connected but distinct decisions. Avoid presenting the sale as a complete estate-planning solution. If succession or inheritance considerations are material, commission current specialist advice and feed the conclusions into the commercial plan. The sale team needs to understand the resulting constraints, not every detail of a family's private affairs.

Refresh the advice at decision points

A model prepared before marketing should be revisited when substantive terms emerge and again if the structure changes. A different completion date, additional retained equity or a revised handover payment can change the analysis. Keep a dated record of the assumptions and outstanding questions. Ask who is responsible for updating it; otherwise each adviser may assume someone else has done so.

The aim is not to chase the smallest theoretical tax bill. It is to make an informed choice about a commercially achievable exit and the proceeds it can realistically provide. This article is commercial guidance, not personal tax or legal advice. Use the current HMRC guidance alongside advice from a suitably qualified professional, coordinated with an experienced ExitPlanning.co.uk adviser around the transaction you are actually considering.