| Stamp duty on shares | 0.5% (on a stock transfer form only above £1,000) |
| SDLT on commercial property (England, Northern Ireland) | 0% up to £150,000, 2% up to £250,000, 5% above |
| Sale of a subsidiary by a UK company | exempt with at least 10% for 12 months and a trading company (SSE) |
| BADR for individual sellers | 18% up to the £1 million lifetime limit; £500,000 from 6 April 2027 under Budget 2026 |
| Investment screening (NSI Act) | mandatory notification in 17 sectors; without clearance the deal is void |
Share deal or asset deal
In a share deal you buy the company's shares. The company stays the same, with all its contracts, staff, licences and every risk from the past. In an asset deal you buy individual assets: machinery, customer base, brand, perhaps a property. The old company stays with the seller, along with its history.
Buyers like asset deals because they take only what they want and can write down the assets bought. Sellers like share deals because the gain on selling shares is often taxed favourably. In the UK transaction tax is the third factor: shares cost little, land a lot.
What the deal costs in transaction taxes
The main UK charges on a purchase. Land tax applies in England and Northern Ireland; Scotland and Wales have their own taxes.
| Share deal | Asset deal | |
|---|---|---|
| Stamp duty / SDRT | 0.5% of the price of the shares; stock transfer form to the Stamp Office and payment within 30 days | none, because no shares are transferred |
| SDLT on property | none, the property stays in the company | on commercial property 0% to £150,000, 2% to £250,000, 5% above; residential has its own rates |
| VAT | none on the share purchase | 20% on the assets, unless a going concern is transferred (TOGC) |
GOV.UK: Tax when you buy shares; Stamp Duty Land Tax non-residential rates; VAT Notice 700/9 (November 2026)
Stamp duty, SDLT and the transfer of a going concern
On shares in a UK company the buyer pays 0.5 percent stamp duty, rounded up to the nearest £5 on a paper stock transfer form and only above a price of £1,000. Form and payment must reach HMRC within 30 days of signing. Under Budget 2026, stamp duty and stamp duty reserve tax on shares are to be replaced by a new Securities Transfer Tax from late 2027; that is announced, not yet law.
In an asset deal including commercial property in England, Stamp Duty Land Tax applies: nothing up to £150,000, 2 percent on the part up to £250,000, 5 percent on everything above. For a property worth a few million, that is the biggest single item of costs. How residential property and companies fit together is in buying property through a company.
For VAT an asset deal has a way out: if a business is transferred as a going concern and the buyer carries on the same kind of business, there is a transfer of a going concern. Then the transfer is not a supply, and the seller may not charge VAT. The conditions are strict, and misjudging them leaves either too much or too little tax on the invoice.
The seller: company or individual
If a UK company sells shares in its subsidiary, the gain is exempt under the substantial shareholding exemption if it has held at least 10 percent of the shares for at least 12 months and the subsidiary is a trading company. That is one reason for a UK holding company. If assets were moved tax-neutrally into the subsidiary within the group beforehand, a degrouping charge can arise on the sale. Since 2011 it is added to the sale proceeds of the shares; if the SSE applies, that part is exempt too.
If you sell as an individual living in the UK, you pay capital gains tax, 18 or 24 percent depending on income. With Business Asset Disposal Relief, 18 percent applies to gains up to the £1 million lifetime limit if you hold at least 5 percent and have been an employee or director there for at least two years. Under Budget 2026 the limit falls to £500,000 from 6 April 2027; in exchange a new founders' relief at 10 percent on up to £10 million for founders of high-growth companies is announced from the same day. Neither is law yet.
Sellers living abroad
If you do not live in the UK, the UK generally does not tax the gain on selling shares; the exceptions are UK property and, in some cases, shares in companies whose value comes mainly from such property. The gain is taxed at home.
If a company at home sells its UK subsidiary, most European countries have a participation exemption that frees the gain wholly or largely, subject to their own minimum stake and holding period. For individuals each country has its own rules. We work out the UK side and give you the questions for your adviser at home; the treaty principles are in the UK's tax treaties.
Under the National Security and Investment Act the buyer must notify and obtain government clearance before acquiring a company in 17 sensitive areas, such as artificial intelligence, communications, data infrastructure, defence, energy, transport or quantum technologies. One trigger is the stake or voting rights rising above 25 percent. Completing without clearance makes the purchase void and risks civil and criminal sanctions. Mandatory notification applies to acquisitions of companies, not individual assets; the government can still review such purchases.
Due diligence: what a buyer in the UK has checked
Lawyers review the law and the contracts, accountants the numbers and tax. We translate the results for your decision.
- 1
Corporate
Registers at Companies House, register of members, beneficial owners, articles, resolutions of recent years.
- 2
Tax
Corporation tax, VAT, PAYE and National Insurance of recent years, open HMRC enquiries, shareholder loans, earlier group reorganisations.
- 3
Contracts and staff
Customer contracts with change of control clauses, employment contracts, share schemes, pensions.
- 4
Protection in the contract
Warranties and indemnities from the seller, possibly insurance for them. How far they reach is negotiated by both sides' lawyers.
Frequently asked questions about buying a UK company
Who pays stamp duty on a share purchase?
The buyer. It is 0.5 percent of the price and due within 30 days of signing the stock transfer form.
As a buyer from abroad, do I have to notify the UK government?
Only if the target is active in one of the 17 sensitive areas and the thresholds are reached, such as more than 25 percent. Then notification is mandatory, wherever the buyer comes from.
Do I pay UK tax if I sell my UK limited company while living abroad?
Generally not, as long as the company is not a property company. The gain is taxed in your country of residence.
Is an asset deal with property always more expensive?
On land tax usually yes, because a share deal triggers no SDLT. In return the buyer gets new base costs for write-downs and leaves the history with the seller. Which outweighs the other we work out for the specific case.
Sources: GOV.UK: Tax when you buy shares; GOV.UK: Stamp Duty Land Tax, non-residential and mixed-use rates; HMRC: Transfer a business as a going concern (VAT Notice 700/9); HMRC Capital Gains Manual CG45400 and CG45420 (Degrouping Charge); GOV.UK: National Security and Investment Act, guidance on acquisitions; GOV.UK: Business Asset Disposal Relief; GOV.UK: Budget 2026 document
