1. Start before terms are commercially fixed
Establish the owners, likely buyer, intended share or asset sale, timescale and desired destination of the proceeds. Once heads of terms are signed, changes to ownership or structure can become harder to justify and may conflict with the deal.
Build the tax work into transaction readiness rather than treating it as a calculation after completion.
2. Test Business Asset Disposal Relief shareholder by shareholder
For a company share disposal, examine the two-year qualifying period, personal-company tests, voting and economic rights, and whether the individual is an officer or employee. Review earlier BADR claims against the lifetime limit.
The BADR rate is 18% for qualifying disposals from 6 April 2026. Model the gain at the correct rate, but do not assume relief until the facts and share documents support it.
3. Review the company's activities and balance sheet
Consider trading income, management time, assets and expenses rather than relying on the company's description. Surplus investments, property, cash or dormant activities may need analysis against the substantial trading requirement.
Any pre-sale clean-up must be commercially and legally workable. Moving an asset can create tax, distribution, stamp, VAT or creditor consequences of its own.
4. Prepare the tax evidence before buyer due diligence
- Share allotments, transfers, rights, elections and shareholder registers.
- Accounts, returns, payroll, VAT and correspondence with HMRC.
- Acquisition costs, valuations, reorganisations and clearance responses.
- Employment status, officer appointments and historic relief claims.
- Schedules reconciling tax balances and potential exposures.
Resolve errors through the appropriate process rather than allowing the buyer to price uncertainty at the last moment.
5. Model how and when consideration is received
Cash at completion, escrow, deferred amounts, earn-outs, loan notes and buyer shares can have different timing and valuation consequences. Warranties, indemnities and completion accounts may also change the final proceeds.
Compare the commercial risk as well as the headline tax. Deferral is not automatically beneficial if it leaves the seller exposed to buyer credit or performance conditions.
6. Plan the proceeds and reporting
Allow for the tax-payment date, investment risk, pensions, gifts, estate planning and any retained business interests. Regulated investment advice is separate from tax advice.
Official sources and further reading
These primary sources support the framework above. Check the current version before acting because tax law and HMRC guidance can change.