When you come to sell your business, you want to be sure that you receive a value you’re happy with.

You may have heard us talk before about the importance of knowing what you need for life after your company, and then targeting that when selling up. After all, why hold out for a buyer who’s willing to pay £2 million when you only need £1.5 million to start the next stage of your life?

However, as part of this calculation, it’s important to be aware of some of the costs you may face when selling your business. If you don’t factor these in, you might settle for a sale price that meets your target, only to be met with a shortfall once these deductions are taken off.

So, discover five important costs that you may want to consider when selling your business, ensuring that you know exactly how much you will receive from a sale.

1. Broker fees

It’s entirely up to you whether to use a broker to facilitate your business sale. There are numerous benefits in doing so as they’ll help you find a willing buyer, which could be important if it’s a tricky market to operate in. Buyers can often prefer going through a broker, as they can have the confidence that your business’s valuation has been corroborated by a third party.

However, the other side of this coin is that the broker will usually take a fee for their services. According to Unbiased, these can be between 1-10% of the entire sale. While 1% might feel like not much of a hit to take, 10% could suddenly feel hefty – especially if you end up losing more to tax (more on this shortly).

So, if you do intend to use a broker, it could be worth factoring this cost into the sale price, or coming to an agreement with both the broker and buyer that suits everyone involved.

2. Marketing costs

Next, you may want to keep in mind that there could be costs in making buyers aware that your business is up for sale.

Using a broker could potentially offset the marketing costs, as they’ll essentially fulfil this role for you.

But, if you choose to go it alone, it’s important not to underestimate the importance of bringing your business to the buyer’s market, just as you do with your product and service. Indeed, as you well know, customers and clients don’t exist in a vacuum; rather, you need to engage with them.

In the same way, potential buyers for your business are out there. But, if they don’t know your business is available, it’s going to make selling difficult.

As a result, it’s worth leaving room in your budget for the cost of making buyers aware of you and your sale.

3. Capital Gains Tax

Tax is likely to play a role in your business sale, and Capital Gains Tax (CGT) is likely to be the first you’ll need to consider.

CGT is chargeable on profits you earn when selling specific assets, including your business.

As of the 2024/25 tax year, you have an Annual Exempt Amount for CGT, which stands at £3,000. After this, gains from your business sale are taxable at the following rates:

 

  • 10% for basic-rate taxpayers
  • 20% for higher- and additional-rate taxpayers.

 

You may be able to apply for Business Asset Disposal Relief (BADR), reducing your CGT rate to 10%, regardless of your tax band. You can claim a total of £1 million in BADR over your lifetime, which could mitigate a large part of the tax bill for your business sale.

Even so, 10% of your sale going to tax is still notable, so it’s worth considering and planning for this cost ahead of time.

CGT may become even more significant for business owners, as it’s reportedly one of the taxes that could be subject to change in the upcoming Budget on 30 October.

You may have read our recent article in which we discussed what it might mean for you if the CGT regime is reformed.

In it, we outlined the potential changes that could come into place, including:

 

  • Aligning CGT rates with Income Tax, effectively doubling your tax liability
  • Abolishing BADR, removing the tax break for higher- and additional-rate taxpayers
  • Reducing the CGT Annual Exempt Amount, meaning more of your gains could become liable for tax.

 

These changes could increase your CGT liability in future, making the tax even more important to factor in when selling your business.

4. Corporation Tax

Alongside CGT, you may also need to consider Corporation Tax if you operate as a limited company and are selling business assets as part of the sale.

Various factors will influence whether Corporation Tax is due, such as:

 

  • How much you make from the sale
  • Whether you are eligible for tax relief
  • The structure of your business.

 

It can be sensible to speak to an accountant (see below) to find out exactly what your tax liability will be. Once you have this information, you can then factor it into your business sale, perhaps adjusting the price to account for any additional cost.

5. Accountancy and legal fees

Any professional you work with during your business sale will need compensating for their services. As discussed above, this could be an accountant, but it could also be a legal professional such as a solicitor if you have employed one.

There may be additional costs involved here aside from paying a professional, such as:

 

  • Conveyancing fees
  • Licenses and permits
  • Energy Performance Certificates.

 

Whenever you approach a professional for help with selling your business, make sure you understand the costs involved from the outset so there are no surprises when you complete the sale. This also ensures that you can factor it into the price you ask for so you receive an amount that allows you to reach your goals.

Get in touch

A business sale can often signal the end of your working life and the start of your retirement.

If you’d like professional support managing a windfall from exiting your business, please do get in touch with us at Cordiner Wealth.

Email hello@cordinerwealth.co.uk or call 0113 262 1242 to speak to us today.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate tax planning.