M&A tax rates and allowances 2026/27
Last updated 8 October 2026
This page brings together the UK tax rates and thresholds that come up most often on a business sale or purchase in the 2026/27 tax year (6 April 2026 to 5 April 2027). Each table has a short note on when it applies. Figures are for England, Wales and Northern Ireland unless stated. Scottish taxpayers have different income tax bands.
The rules behind each relief are detailed, and a figure on its own won't tell you whether you qualify. Use this page as a quick reference, not as advice on a particular deal.
Capital gains tax
| Item | 2026/27 | When it applies |
|---|---|---|
| Rate within the basic rate band | 18% | Gains that fit within your unused basic rate band after your income is counted |
| Rate above the basic rate band | 24% | Gains above the basic rate band, and all gains of higher and additional rate taxpayers |
| Annual exempt amount | £3,000 | Deducted from each individual's total gains for the year |
The 18% and 24% rates have applied since 30 October 2024. For a sale of shares, the date of disposal is usually the date of an unconditional contract, not completion.
Business Asset Disposal Relief (BADR)
| Item | Figure | When it applies |
|---|---|---|
| Rate for disposals from 6 April 2026 | 18% | Qualifying gains in 2026/27 |
| Rate for 2025/26 | 14% | Disposals from 6 April 2025 to 5 April 2026 |
| Rate before 6 April 2025 | 10% | Earlier disposals |
| Lifetime limit | £1 million of qualifying gains | Per person, across all claims |
| Maximum saving against 24% | £60,000 | Where the full £1 million qualifies |
| Qualifying period | 2 years | The conditions must be met throughout the two years before the sale |
On a share sale, these conditions must all be met for the two years up to the sale:
| Condition | Detail |
|---|---|
| Trading company | The company is a trading company, or the holding company of a trading group |
| Officer or employee | You hold a role in the company or a company in the same group |
| Personal company | At least 5% of the ordinary shares and votes, plus at least 5% of the profits and assets on a winding up or of the proceeds on a sale |
| EMI shares | Exempt from the 5% test. The option must have been granted at least two years before the sale |
See our Business Asset Disposal Relief page and the BADR calculator for more.
Investors' Relief
| Item | Figure | When it applies |
|---|---|---|
| Rate for disposals from 6 April 2026 | 18% | Qualifying gains in 2026/27 |
| Rate for 2025/26 | 14% | Disposals from 6 April 2025 to 5 April 2026 |
| Rate before 6 April 2025 | 10% | Earlier disposals |
| Lifetime limit | £1 million | Separate from the BADR limit. Reduced from £10 million for disposals on or after 30 October 2024 |
| Minimum holding period | 3 years | Newly issued shares in an unlisted trading company, held for at least three years |
Investors' Relief is for investors who don't work in the company. It is often relevant to angel investors and family members who subscribed for shares.
Substantial Shareholding Exemption (SSE)
| Condition | Detail | When it applies |
|---|---|---|
| Size of holding | At least 10% | Held by the selling company in the company being sold |
| Holding period | A continuous 12 months within the 6 years before the sale | Measured at the date of disposal |
| Status of the company sold | A trading company, or the holding company of a trading group | Required for the exemption to apply |
| Effect | The gain is exempt from corporation tax | Sales of shares by a company, not by individuals |
SSE is often the reason sellers hold their business through a holding company. Try the SSE checker for a first view.
Employee Ownership Trusts
| Item | Figure | When it applies |
|---|---|---|
| Capital gains tax for sellers | Half the gain taxed at 18% or 24%, the other half relieved | A qualifying sale of a controlling interest to an Employee Ownership Trust on or after 26 November 2025. Business Asset Disposal Relief can't be claimed on the same sale |
| Tax-free employee bonus | Up to £3,600 per employee per year | Qualifying bonuses paid by a company owned by an Employee Ownership Trust. Free of income tax, but National Insurance is still due |
From 30 October 2024, the trustees must be UK resident, former owners and people connected with them can't control the trust, and the trustees must take reasonable steps not to pay more than market value. The clawback period was also extended. For sales on or after 26 November 2025, the relieved half of the gain is held over and comes into charge if the trustees later sell the shares.
Inheritance tax
| Item | Figure | When it applies |
|---|---|---|
| Standard rate | 40% | On the value of an estate above the available nil-rate bands |
| Nil-rate band | £325,000 | Available to every estate |
| Residence nil-rate band | £175,000 | Where a home passes to direct descendants |
| Residence nil-rate band taper | £1 lost for every £2 above £2 million | Estates worth more than £2 million |
| Business Relief at 100% | First £2.5 million of combined qualifying business and agricultural property | Deaths on or after 6 April 2026. Unused allowance can transfer to a surviving spouse or civil partner |
| Business Relief above the allowance | 50% | Qualifying property above £2.5 million |
Business Relief is usually lost once shares are sold for cash, from the date of a binding contract for sale. A sale can therefore move a large amount from a relieved asset into a fully taxable one. Inheritance tax has been based on long-term UK residence since April 2025. The IHT after a sale calculator shows the effect.
Income tax for sellers
| Item | 2026/27 | When it applies |
|---|---|---|
| Personal allowance | £12,570 | Income taxed at 0% |
| Personal allowance taper | £1 lost for every £2 of income above £100,000 | Fully withdrawn at £125,140 |
| Basic rate (20%) | £12,571 to £50,270 | Taxable income in this band. The unused part also sets how much of a gain is taxed at 18% |
| Higher rate (40%) | £50,271 to £125,140 | Income in this band |
| Additional rate (45%) | Over £125,140 | Income above this level |
| Dividend allowance | £500 | The first £500 of dividends |
| Dividend ordinary rate | 10.75% | Dividends in the basic rate band |
| Dividend upper rate | 35.75% | Dividends in the higher rate band |
| Dividend additional rate | 39.35% | Dividends in the additional rate band |
Income tax rates matter on a deal where part of the price is treated as income, such as a pre-sale dividend, an earn-out tied to continued employment, or certain share buybacks.
Corporation tax
| Item | Financial year from 1 April 2026 | When it applies |
|---|---|---|
| Main rate | 25% | Profits over £250,000 |
| Small profits rate | 19% | Profits of £50,000 or less |
| Marginal relief lower limit | £50,000 | Profits between the lower and upper limits are taxed at an effective rate between 19% and 25% |
| Marginal relief upper limit | £250,000 | |
| Marginal relief standard fraction | 3/200 | Used in the marginal relief calculation |
Corporation tax applies to a company's gains as well as its trading profits, so it is the rate on a company's sale of an asset or subsidiary where SSE doesn't apply.
Stamp duty on shares
| Item | Figure | When it applies |
|---|---|---|
| Stamp duty or Stamp Duty Reserve Tax | 0.5% | Paid by the buyer on the price for shares |
| Rounding | Up to the nearest £5 | Stamp duty on a stock transfer form |
| Exemption threshold | £1,000 or less | No stamp duty on a stock transfer form for consideration of £1,000 or less |
Stamp duty is charged on the buyer, so it is part of the cost of acquiring a company rather than a tax for the seller.
Stamp Duty Land Tax (asset purchases)
| Item | Figure | When it applies |
|---|---|---|
| Non-residential and mixed-use: up to £150,000 | 0% | Freehold purchases in England and Northern Ireland |
| Non-residential and mixed-use: £150,001 to £250,000 | 2% | The portion of the price in this band |
| Non-residential and mixed-use: above £250,000 | 5% | The portion of the price above £250,000 |
SDLT applies to land and buildings bought directly, so it is relevant on an asset purchase that includes property. It isn't charged on a purchase of shares, even if the company owns property. Scotland and Wales have their own land taxes.
Sources
- Capital Gains Tax rates and allowances (GOV.UK) (opens in a new tab)
- Business Asset Disposal Relief: eligibility (GOV.UK) (opens in a new tab)
- Business Asset Disposal Relief: how to claim (GOV.UK) (opens in a new tab)
- CG63515: Investors' Relief rates from April 2025 and April 2026 (HMRC manual) (opens in a new tab)
- Capital Gains Tax: Investors' Relief, reduction in the lifetime limit (GOV.UK) (opens in a new tab)
- CG53070: Substantial shareholdings exemption, the substantial shareholding requirement (HMRC manual) (opens in a new tab)
- EIM03051: Employee Ownership Trusts (HMRC manual) (opens in a new tab)
- Capital Gains Tax: Employee Ownership Trusts relief reduction (GOV.UK) (opens in a new tab)
- Inheritance Tax (GOV.UK) (opens in a new tab)
- Inheritance Tax: residence nil rate band (GOV.UK) (opens in a new tab)
- IHTM25520: AR/BR 100% relief allowance, individuals (HMRC manual) (opens in a new tab)
- Agricultural property relief and business property relief changes (GOV.UK) (opens in a new tab)
- Income Tax rates and bands (GOV.UK) (opens in a new tab)
- Income Tax rates and allowances: current and past (GOV.UK) (opens in a new tab)
- Rates and allowances: Corporation Tax (GOV.UK) (opens in a new tab)
- Tax when you buy shares (GOV.UK) (opens in a new tab)
- Stamp Duty on shares (GOV.UK) (opens in a new tab)
- Stamp Duty Land Tax: non-residential and mixed-use rates (GOV.UK) (opens in a new tab)
We review this page every April and after each Budget.
FAQs
Frequently asked questions
What rate of capital gains tax will I pay when I sell my company?
For 2026/27, gains are taxed at 18% to the extent they fall within your unused basic rate band and 24% above it. If the sale qualifies for Business Asset Disposal Relief, up to £1 million of lifetime gains is taxed at 18% regardless of your income.
What is the capital gains tax annual exempt amount for 2026/27?
It is £3,000 per person. On a business sale it makes little difference to the overall bill, but spouses and civil partners each have their own allowance.
Is Business Asset Disposal Relief still worth having at 18%?
Usually, yes. Without the relief, most sellers would pay 24% on their gains. Applying 18% instead to the £1 million lifetime limit saves up to £60,000 per person.
What is the difference between BADR and Investors' Relief?
BADR is for people who work in the company and hold at least 5%. Investors' Relief is for external investors in unlisted trading companies who subscribed for new shares and held them for at least three years. Both charge 18% for 2026/27 and each has its own £1 million lifetime limit.
Does a company pay tax when it sells a subsidiary?
Not if the Substantial Shareholding Exemption applies. Broadly, the selling company must have held at least 10% for a continuous 12 months within the six years before the sale, and the company being sold must be a trading company or the holding company of a trading group. Otherwise the gain is taxed at the company's corporation tax rate.
Is selling to an Employee Ownership Trust tax-free?
Not fully. For a qualifying sale of a controlling interest to an Employee Ownership Trust on or after 26 November 2025, half of the gain is relieved and the other half is taxed at normal capital gains tax rates of 18% or 24%. Business Asset Disposal Relief can't be claimed on the same sale. The conditions were tightened from 30 October 2024, and a later breach can trigger a clawback, so the structure needs care.
How much Business Relief is available from 6 April 2026?
For deaths on or after 6 April 2026, 100% relief is limited to £2.5 million of combined qualifying business and agricultural property per person, with 50% relief on the value above that. Unused allowance can pass to a surviving spouse or civil partner.
What happens to Business Relief after I sell my company for cash?
It is usually lost. Business Relief applies to qualifying business assets, not to cash, and it normally stops applying once a binding contract for sale is in place. Sale proceeds then fall into your estate at the standard 40% rate unless they are planned for.
How are dividends taxed in 2026/27?
After the £500 dividend allowance, dividends are taxed at 10.75% in the basic rate band, 35.75% in the higher rate band and 39.35% in the additional rate band. These rates matter if you take a pre-sale dividend or the deal is structured partly as income.
Is there stamp duty when you buy shares in a private company?
Yes. The buyer usually pays 0.5% of the price, rounded up to the nearest £5 on a stock transfer form. No stamp duty is payable on a stock transfer form where the consideration is £1,000 or less.
Related
Related pages
Business Asset Disposal Relief
Make sure you qualify for Business Asset Disposal Relief when you sell. Specialist advice on the conditions, the 18% rate and protecting your claim.
Read moreSubstantial Shareholding Exemption
Selling a subsidiary or a stake in a trading company? The Substantial Shareholding Exemption can make the gain exempt from corporation tax.
Read moreEmployee Ownership Trusts
Selling to an Employee Ownership Trust: half the gain relieved from November 2025, the post-2024 rules, funding and tax-free bonuses.
Read more
Talk to a specialist before you sign anything.
The earlier tax is considered, the more options you have. Book a confidential call.
Or write to taxadvisory@aswatax.co.uk
