Selling Your Business? Why Your Company Structure Could Cost You Six Figures in Tax
If you're planning to sell your business in the next few years, the structure you have today will determine how much of the proceeds you actually keep.
Get it right, and you could sell tax-free. Get it wrong, and you could hand over six figures to HMRC unnecessarily.
The Problem: Selling Shares Personally
When you sell your trading company directly as an individual shareholder, you face Capital Gains Tax on the gain — up to 24%, or 18% on the first £1 million from 2026 under Business Asset Disposal Relief.
On a business sale of £1 million, that could translate to a tax bill well into six figures, eroding the wealth you spent decades generating.
The Solution: Sell From Within a Holding Company Structure
If your trading company is held within a group structure — completely owned by a parent holding company — you can choose to sell the trading subsidiary instead of selling personally.
Under the Substantial Shareholding Exemption (SSE), the gain on the sale of a trading subsidiary can be completely free of Corporation Tax, provided specific structural conditions are met.
The proceeds then stay within your holding company structure in full — available for reinvestment, or to withdraw personally across tax years when it suits your position best.
This is the single biggest reason to plan your restructure early. The SSE has conditions, including minimum continuous shareholding periods. Restructuring 12 months before a sale is possible but tight. Restructuring three to five years before an exit is clean, effective, and gives you maximum operational flexibility.
What About the Cash After the Sale?
Once the trading company is successfully sold and the proceeds sit inside your holding company completely tax-free, you gain strategic agility:
- Reinvest into new commercial ventures or property.
- Draw down personally over several tax years to carefully manage lower bracket dividend bands.
- Fund corporate pension mechanisms directly.
- Pass long-term corporate wealth down to family through structured setups.
FAQ
What are the conditions for the Substantial Shareholding Exemption?
The main conditions relate to the holding company and subsidiary both being trading entities, and a minimum 10% shareholding held for a continuous 12-month period in the six years before disposal. Co-gency Corporate Finance will assess your specific alignment.
I'm planning to sell next year — is it too late?
Not necessarily, but time is critical. Reach out immediately to configure things before structural deadlines close.
Thinking about selling your business in the next 5 years?
The best time to structure for an exit is before negotiations begin. Learn how we handle filings and legal documentation through our associated practice. Claim your free structure review.
Learn how Co-gency can protect your sale proceeds
