A share sale and an asset sale can leave an IFA owner with different net proceeds from the same headline price. Tax depends on who sells the asset, which reliefs apply and how money reaches the owner. The comparison below separates the company-level charge from tax on the owner's proceeds.
First, the necessary framing. This article is general information about how the UK tax system treats two deal structures, written for owners of advice firms who want to understand the shape of the question before they sit down with an accountant. It is not tax advice, it does not know your circumstances, and nobody should structure a sale on the strength of an article. The numbers below use rates as they stand for the 2026-27 tax year; an Autumn Budget can change any of them.
With that said, here is the point in one paragraph. When you sell the shares of your limited company, there is normally one tax event: you, the shareholder, pay Capital Gains Tax on your gain, at 18 per cent where Business Asset Disposal Relief applies. When your company sells its assets, there are normally two tax events: the company pays corporation tax on its gain, and then you pay tax again when you take the proceeds out of the company. Same buyer, same headline price, materially different amount landing in your bank account. That is why the structural choice covered in Asset sale or share sale: the choice that changes everything is, underneath, a tax choice.
What actually gets sold in each structure
In a share sale, the buyer purchases the shares of your limited company from you personally. The company itself, with its client bank, its recurring income, its contracts, its history and its liabilities, carries on under new ownership. The consideration is paid to you as shareholder, so the gain arises in your hands and the tax analysis is a personal CGT calculation.
In an asset sale, the company remains yours and it sells things it owns: typically the client bank, the goodwill, perhaps the trading name and some contracts. The consideration is paid to the company, because the company is the seller. Your company now holds cash instead of a business, and you still own the company. Nothing has yet reached you personally, and that is where the second layer of tax comes from.
This distinction holds whether your firm is directly authorised or trades as an appointed representative, though the mechanics of moving the clients differ: an asset sale of a client bank involves transferring or novating client relationships to the buyer, while a share sale moves the whole authorised entity or AR in one piece. The regulatory side of client bank transfers is covered in Selling your client bank without selling your company; here we stay with the tax.
The share sale: one CGT event
Sell your shares and you make a personal capital gain: proceeds less what the shares cost you, which for most founder-shareholders is a nominal amount. Against that gain you have an annual exempt amount of £3,000 for 2026-27, per gov.uk's CGT rates page.
The rate then depends on whether Business Asset Disposal Relief applies. Where it does, gov.uk states the rate as 18 per cent on qualifying gains disposed of from Mon 6th Apr 2026, following the staged rise from 10 per cent (disposals on or before Sat 5th Apr 2025) through 14 per cent (2025-26). BADR carries a lifetime limit of £1 million of qualifying gains per person, per the HS275 helpsheet. Gains above the lifetime limit, or gains that do not qualify, are taxed at the ordinary CGT rates: 24 per cent for higher-rate taxpayers, 18 per cent for basic-rate taxpayers within the basic rate band and 24 per cent above it.
The qualifying conditions for BADR (broadly, a trading company, a minimum shareholding and officer or employee status, held for the qualifying period) have their own article: Business Asset Disposal Relief in 2026: what the 18 per cent rate means for you. For present purposes, the headline is that a qualifying share sale is one tax event at 18 per cent up to the lifetime limit.
The asset sale: two layers
An asset sale splits the tax into two stages, and both matter.
Stage one sits inside the company. When the company sells its client bank and goodwill, it makes a chargeable gain, and companies do not pay CGT on gains; they pay corporation tax. The main rate of corporation tax is 25 per cent for profits over £250,000, with a small profits rate of 19 per cent below £50,000 and marginal relief between. A sale of a client bank of any size will usually push the company's profits for that year well into main-rate territory, so 25 per cent is the realistic planning assumption for most disposals of this kind. There is no BADR at this stage: BADR is a relief for individuals, and the company gets no equivalent.
Stage two is extraction. The company now holds the after-tax proceeds, and you own the company, but the money is not yours until it comes out. There are two main routes.
The first is dividends. Dividend income is taxed at the dividend rates: for 2026-27 these run to 35.75 per cent for higher-rate taxpayers and 39.35 per cent at the additional rate, and a sum the size of a practice sale will put most of it into the top band. Layered on top of the corporation tax already paid, dividends are usually the most expensive way to take sale proceeds, which is why they tend to feature only where an owner wants to draw the money gradually over several years and manage the bands.
The second is a members' voluntary liquidation, an MVL. The company is formally wound up, and the distribution to shareholders in the liquidation is treated as capital, not income. That puts you back into CGT territory, and where the conditions are met, BADR can apply to the liquidation distribution at the same 18 per cent rate, subject to the same £1 million lifetime limit. An MVL has real costs (a licensed insolvency practitioner must run it) and real conditions, including the anti-phoenixing rules, which can recharacterise the distribution as income if you carry on a similar trade within two years and the arrangement has a tax main purpose. Anyone planning the MVL route needs specific advice on those rules before, not after, the sale.
So the asset sale route, even done as efficiently as the system allows, is corporation tax first and CGT second. Two events, stacked.
A worked comparison at 2026-27 rates
Take a deliberately simple case. A deal worth £1,000,000, a founder-shareholder whose shares have negligible base cost, full BADR qualification, no other gains in the year, and the whole amount paid on completion with no earn-out or deferred consideration. Every one of those assumptions is doing work, and real deals breach most of them, but the shape of the comparison survives.
Share sale. You make a personal gain of £1,000,000. Deduct the £3,000 annual exempt amount, leaving £997,000 taxable. BADR applies at 18 per cent, and the gain sits within the £1 million lifetime limit, so the tax is £179,460. You keep roughly £820,500. One event, an effective rate a shade under 18 per cent.
Asset sale, extracted by MVL. The company sells its client bank and goodwill for £1,000,000 and, assuming negligible base cost, makes a gain of £1,000,000. Corporation tax at 25 per cent takes £250,000, leaving £750,000 in the company. The company is then wound up through an MVL and the £750,000 is distributed to you as capital. Deduct the £3,000 exempt amount, apply BADR at 18 per cent to the £747,000 balance, and the personal tax is £134,460. You keep roughly £615,500, before the liquidator's fees. Two events, a combined effective rate of about 38 per cent.
Asset sale, extracted by dividend. Same £750,000 sitting in the company, but drawn as dividends in a single year by an additional-rate taxpayer: dividend tax around £295,000 on top of the £250,000 corporation tax already paid. You keep somewhere near £455,000, a combined effective rate approaching 55 per cent. Spreading the dividends over years softens this, at the cost of leaving your money inside a company for that long.
On these assumptions, the share sale delivers around £205,000 more than the best-case asset sale, on an identical headline price. That is not a rounding error; it is a fifth of the deal. It is also why a buyer's preference for an asset purchase and a seller's preference for a share sale are not stubbornness on either side, but each party responding rationally to where the tax and the liabilities fall.
Why buyers still push for asset deals
If the share sale is so much better for the seller, why does anyone sell assets? Because the buyer's incentives run the other way, and price is only one term among many.
- A share purchase brings the company's whole history, including liability for past advice, which is why warranties, indemnities and run-off cover dominate share deal negotiation.
- An asset purchase lets the buyer take the client bank and leave the historic liabilities in your company, which your company (and its capital) still answers for.
- Buyers of small firms, and structured asset sales to a national acquirer, are often set up to transact only one way, so the structure can be a condition of the deal rather than a negotiating point.
- The tax gap itself becomes a pricing conversation: a seller giving up the share sale treatment has a rational case for a higher headline number, and buyers know it.
None of this makes either structure right in the abstract. A firm with a clean history and a confident buyer may transact as a share sale at a keener price; a firm whose buyer will not take the company may find the asset route is the only route, and the job becomes managing the two tax layers as well as the rules allow.
The complications the simple sums hide
The worked example above assumed everything lands on completion. Most deals do not pay that way. Earn-outs and deferred consideration change when the tax falls due and, in some structures, whether later payments are capital at all; the mechanics, including the unattractive possibility of paying tax on money not yet received, are set out in How earn-outs are taxed. The BADR rate that applies is generally fixed by the disposal date, which makes deal timing a tax term as well as a diary entry.
The other standing caveat is that every figure here is a 2026-27 figure. The BADR rate has moved twice in two tax years already, and the lifetime limit was cut from £10 million to £1 million in March 2020. A structure modelled today should be stress-tested against the possibility that the rates move again before completion.
The honest summary: the structural fork in your sale is also a tax fork, the share sale side of it is usually taxed once at 18 per cent where BADR holds, and the asset sale side is usually taxed twice, with the gap between them often worth 20 per cent of the deal. That is the scale of the question you are taking to your accountant, and it belongs in the conversation from the first meeting, not the last. The rest of this pillar, starting with What your net proceeds actually look like and the wider tax and timing hub, works through the pieces in more detail.
And if you want a headline number of your own to test these sums against, the free IFA valuation calculator gives you a range and explains the factors affecting it.