Asset Purchases vs Share Purchases: What Is The Difference? UK (2026)
- Simon Bourke
- Jan 26
- 14 min read
Updated: 5 days ago
26th January 2026
Summary
Selling a UK limited company is usually done in one of two ways: an asset sale (selling selected business assets) or a share sale (selling the company itself). Both structures can achieve an exit, but they differ in how risk, admin, tax and continuity play out for you, your team, and your clients.
This guide breaks down the practical differences in simple terms, including what typically happens to contracts and client relationships, how TUPE can affect employees in an asset sale, and why share sales often involve more extensive due diligence and warranties.
It also covers the high-level tax considerations for UK sellers, and the extra regulatory steps that can apply in the financial planning market, such as FCA Change in Control approvals on share sales of directly authorised firms. The aim is to help you understand the trade-offs so you can choose the structure that best fits your goals and timeline.
For simplicity, this guide is written for owners of limited companies (not sole traders or partnerships) and, because Chapters Capital specialises in financial planning M&A, it is tailored to IFAs, wealth management firms and asset managers. In the case of a sole trader or a partnership the deal structure typically defaults to an asset sale.
Table of contents
What is a limited company?
A limited company is a business that legally qualifies as its own entity. This means that the company is separate from its directors and shareholders. The legal structure of a limited company allows its owner(s) to sell the business’ shares or assets when the time comes to exit.
What is an asset sale/asset purchase?
In an asset sale (asset purchase), the buyer purchases a selection of a company’s assets. These assets might include the business’ trading name, client book, goodwill, business premises, and IT systems, to name a few. Asset purchases are typically offered by buyers when the complexity, risk or cost of a share sale outweighs the expected value of the transaction. When selling assets, any historic liabilities that the company has remain within the business.
In an asset sale, because the contracting party is changing, client contracts don't automatically move to the buyer. These contracts need to be formally transferred, either through assignment (getting permission to transfer the contract) or novation (creating a new contract with the buyer). In practice for UK financial advisers, this means clients are usually re-papered onto the buyer's terms. This process gives a seller the opportunity to actively communicate the reasons for the sale with their clients and to give context on who the buyer is.
Asset sales are sometimes preferred by sellers who are looking to avoid investing the time and cost associated with the due diligence of a share sale. As a result, asset purchase agreements (APAs) can be favoured by business owners of smaller companies.
After an asset sale, the company’s remaining assets, liabilities, and cash are left with the seller, and the shareholders continue to own the company. The shareholder(s) must then finish the transfer of the assets, settle any remaining liabilities and deal with any retained assets. If the business is directly authorised, they must apply to formally remove their Part 4A permissions and then in most cases wind up the company via a Members' Voluntary Liquidation (MVL). The business could be kept open at the discretion of the shareholders, but in most cases it will be closed once all matters are settled.
What are the tax implications of an asset sale for the seller in the UK?
Please note: This article is for general informational purposes only and does not constitute tax advice. If you require tax advice in relation to an asset sale, you should seek guidance from an accountant who can consider your specific circumstances.
In an asset sale, as it is the business selling the assets and the limited company is a separate legal entity from its shareholders, the consideration (the purchase price paid by the buyer) is paid to the company.
This means corporation tax (CT) is applied to the profit/gain made on the sale (minus allowable costs). Intangible assets acquired after 31 March 2002 are included in the company’s trading profits and taxed at corporation tax rates. Examples of intangible assets include the company’s trading name or goodwill, and the company’s client bank/client relationships – which are often rolled into or documented as goodwill.
Business Asset Disposal Relief (BADR), formally known as Entrepreneurs’ Relief, is not available at a company level as it is a personal capital gains tax (CGT) relief.
That being said, following on from the sale, the owner(s) will still need to extract the remaining funds from the company. Typically, this is done in one of three ways: through dividends, pension contributions (subject to the relevant rules and allowances), or a solvent liquidation (for example, a Members’ Voluntary Liquidation). The tax outcome depends on the route taken, but if the company is wound up solvently, the amount distributed to shareholders may then qualify for BADR (if the relevant conditions are met). It is worth noting that, from 6 April 2026, the BADR rate will increase from 14% to 18%, following the announcement in the Autumn Budget on 30 October 2024.
It is due to this initial corporation tax, and the second layer of tax (CGT) when the business owner extracts the funds from the company, that asset sales are sometimes referred to as involving a “double tax” and are often seen as less tax efficient than a share sale for the seller.
Again, the above is a high-level overview of the potential tax implications of an asset sale involving a limited company. It is not tax advice and should not be relied upon as such. Business owners considering, or undertaking, a transaction should seek advice from an accountant based on their specific circumstances.
What happens to employees in an asset sale?
In a UK asset sale, employees of the business are protected by the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). If the sale is a “business transfer” (the business or part of it is sold as a going concern), TUPE ensures that all employees assigned to that business automatically move over to the buyer on their existing terms and conditions. The buyer effectively becomes the new employer for those staff, so employees continue to benefit from the same rights and protections post-transfer. Importantly, neither the seller nor the buyer can pick and choose which employees transfer – anyone assigned to the transferring business will move over by law.
Dismissing employees because of the sale is prohibited – any such dismissal is usually deemed automatically unfair under TUPE. In practice, for financial planning firms, this means client-facing advisers and support staff wanting to stay on will typically transfer to the new owner, helping maintain continuity for clients post-sale.
What are the advantages of an asset sale for the seller?
Flexibility to exclude/retain certain assets or parts of the business
Typically fewer warranties and indemnities than in a share sale
Can make the business more appealing to buyers who are risk-averse
Much lower deal fees such as due diligence, legals or financial advice
Speed – usually faster because there is less due diligence for the buyer to perform compared to a share sale, and avoids change in control delays
What are the disadvantages of an asset sale for the seller?
Sellers do not receive the sale proceeds directly
Complexity of transferring each asset/contract
The seller must comply with applicable seller obligations under TUPE 2006
Potential double taxation and tax calculations can be quite complicated
Risk of client loss during transition
Post-sale costs – potential wind-down, liabilities, ongoing responsibilities
VAT paid by the buyer on asset transfers that don’t meet Transfer of a going concern (TOGC) conditions, which may lower the offer
Transferring leases on properties can be tricky
What is a share sale/share purchase?
In a share sale (share purchase), the buyer purchases the company’s shares from the shareholder(s). Essentially, the shareholder sells the entire company as a legal entity, including all of the company’s assets and liabilities, and the buyer becomes the new owner.
In contrast to an asset sale, client agreements remain with the same FCA-authorised company, so they do not need to be novated or re-papered as part of a share purchase agreement. The company also continues to own the assets and hold the contracts, so the deal does not require an asset-by-asset transfer exercise. However, this is subject to any “change in control” consents in key third-party agreements. It is likely that clients will be moved from the acquired regulated entity into the buyer’s regulated business and at that point client re-papering or consent may be required.
Sales and purchase agreements (SPAs) are usually preferred by sellers, depending on the size and shape of their businesses, due to their tax efficiency, simplified sale structure, and more streamlined continuity for clients.
However, because a share purchase is riskier for the buyer, they will usually require a package of warranties (broad statements of fact about the company that, if untrue, give the buyer a contractual claim against the seller). Additionally, where particular risks are identified, the buyer will also often require specific indemnities – which are a promise to reimburse the buyer if an issue with a particular liability arises. It is also common for the proceeds from the sale to be made in stages over a number of years.
Unlike in an asset sale, in a share sale the FCA-authorised limited company is not left with the seller to de-authorise and wind down, reducing post-sale administration. However, completion cannot take place until the FCA has approved the Change in Control application. A Change in Control is the FCA’s approval process for the buyer to become the new controller/owner of an authorised firm. Officially it takes up to 60 working days once the submission is complete, but it can take longer if the FCA asks follow-up questions.
What are the tax implications of a share sale for a seller in the UK?
Please note: This article is for general informational purposes only and does not constitute tax advice. If you require tax advice in relation to a share sale, you should seek guidance from an accountant who can consider your specific circumstances.
The main tax for sellers engaging in a share sale is Capital Gains Tax (CGT) on the gain made on the sale of the shares, as the consideration is paid to the shareholders personally rather than to the company. Sellers may be able to deduct their annual CGT exemption from this, which is £3,000 for individuals as of January 2026. If eligible, individual sellers may also use Business Asset Disposal Relief (BADR) to reduce the CGT rate on qualifying gains (within the lifetime limit of £1 million). As of January 2026, the BADR rate is 14%, but it will rise to 18% in the new 2026 tax year.
Sellers engaging in a share purchase agreement will not face corporation tax, unlike in an asset sale.
Again, the above is a high-level overview of the potential tax implications of a share sale involving a limited company. It is not tax advice and should not be relied upon as such. Business owners considering, or undertaking, a transaction should seek advice from an accountant based on their specific circumstances.
What happens to employees in a share sale?
In a UK share sale, the buyer purchases the company’s shares, but the employer stays the same legal entity. Because the company is still the employer, staff stay employed on the same contracts, with the same pay, benefits and length of service.
TUPE is not automatic in a share sale if the acquired entity stands alone. However, in financial planning acquisitions, buyers typically intend to integrate the acquired business into their main regulated entity. When integration takes place, moving staff from one company to another, TUPE does apply automatically. This will involve movement of client agencies, staff contracts, supplier contracts, etc. from OldCo to NewCo. Once this is done, the acquired firm will likely go through the removal of Part 4A permissions and the MVL process, but this time it is the buyer running this process, not the seller as would be the case in an asset deal.
If the buyer restructures the business, changes roles, or reduces headcount, any redundancies must be handled under normal UK employment rules.
What are the advantages of a share sale for the seller?
Tax efficiency – sale proceeds go directly to the seller and are not subject to corporation tax. They may also be eligible for Business Asset Disposal Relief (formerly entrepreneurs’ relief) as well as a small capital gains tax allowance.
Straightforward/simpler sale structure – the company is handed over as a whole so don’t have to worry about winding down the company or other post-sale admin associated with an asset sale.
Continuity for clients and contracts, which can protect the value of the client book.
What are the disadvantages/considerations of a share sale for the seller?
Exhaustive due diligence process – longer and more extensive than in an asset sale
More work up front to get company sale ready and answer all of the buyer’s questions
More expensive professional fees – legal and accountants
Longer timeline
Change in control requires FCA approval before completion
Retention of personal guarantees
More warranties and indemnities asked of the seller
Buyer may offer a lower sale price due to higher risk of purchase
How do I prepare for an asset or share sale?
Engage a specialist broker you trust as early as you can
With your broker's assistance, organise financials and compliance records – company accounts, property leases, employment contracts etc. Make sure these are all electronic where possible to streamline the process.
Valuation – talk to a broker to get an idea of what your business is worth. Chapters Capital offers free confidential consultations exclusively for financial services businesses (no flat fees) to help you understand your business valuation, what buyer appetite would be for it, and the current trends in the financial planning M&A market.
Discuss with your broker/corporate finance advisor what deal structure would be best for you – asset sale or share sale.
Make a plan for your staff. Are they staying on or leaving with you?
Decide what your non-negotiables are when looking for a buyer.
Be open and up front about advice you have given, including any DB transfers, so you don’t sabotage your chances of a deal going through.
Conclusion
Whether you sell your business through an asset sale or a share sale, both routes can achieve a successful exit, but the experience (and the risk) can look very different. Asset sales can offer buyers comfort by ring-fencing historic liabilities, but they tend to involve more operational work for sellers, including contract-by-contract transfers, potential TUPE considerations, and a more complex tax and cash-extraction process. Share sales are often simpler from a continuity perspective, with the same FCA-authorised entity, contracts and client relationships typically staying in place, but they usually come with more extensive due diligence, more warranties and indemnities, and (for authorised firms) the added time of getting FCA Change in Control approval.
If you’re an IFA, wealth management firm or asset manager considering a sale, the “best” structure depends on your goals, your timeline, your historic advice profile and what the buyer market will support. Chapters Capital offers a free, confidential consultation to help you understand your options — including likely valuation, buyer appetite, deal structure (asset vs share), and the practical steps to get sale-ready. If you’d like to explore what a process could look like for your firm, book your free consultation or send us a message: +44 (0)204 519 7811 | info@chapterscapital.co.uk
Frequently Asked Questions
Will I pay less tax with a share sale or asset sale?
Generally, share sales are more tax efficient for sellers. In a share sale, you pay only Capital Gains Tax (CGT) on the gain on your shares, and you may qualify for Business Asset Disposal Relief (reducing the rate to 14% as of January 2026, rising to 18% from April 2026).
Asset sales involve corporation tax on the company's gain, followed by personal taxation when you extract the funds; that typically results in a higher overall tax burden. However, your specific tax outcome depends on your individual circumstances, so you should seek advice from an accountant.
When should I choose an asset sale over a share sale?
Consider an asset sale when: (1) You want to exclude or retain certain assets or parts of the business, (2) You want to avoid the time and cost of extensive due diligence, (3) Speed is a priority and you want to avoid Change in Control delays, (4) Your buyer is risk-averse and prefers not to take on historic liabilities, (5) You want lower professional fees and a faster process. However, remember that asset sales typically result in less favorable tax treatment due to a potential "double taxation" and require and can require more operational work. The optimal structure depends on your goals, timeline, and buyer circumstances.
Do employees automatically transfer in an asset sale?
Yes. In a UK asset sale where the business (or part of it) is sold as a going concern, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) ensures that all employees assigned to that business automatically transfer to the buyer on their existing terms and conditions. The buyer becomes the new employer, and neither you nor the buyer can pick and choose which employees transfer; anyone assigned to the transferring business will move over by law.
Do I need FCA approval to sell my IFA firm's shares?
Yes. In a share sale of a directly authorised firm, the buyer must obtain FCA approval through a Change in Control application before completion can take place. Change in Control is the approval process for a new controller/owner of an authorised firm. Officially, this process takes up to 60 working days once the submission is complete, though it can take longer if the FCA asks follow-up questions.
What is the double taxation issue with asset sales?
Asset sales involve two layers of tax. First, the company pays corporation tax on the profit from selling the assets. Second, when you extract the funds from the company (through dividends, pension contributions, or liquidation), you face personal taxation, typically CGT if the company is wound up solvently. This double tax makes asset sales generally less tax efficient than share sales for sellers. Engage an accountant for any tax advice on asset sales vs share sales.
How long does an asset sale take compared to a share sale?
Asset sales are usually faster than share sales. This is because there is less due diligence for the buyer to perform in an asset sale, and you avoid the Change in Control approval delays that apply to share sales of directly authorised firms.
How much tax do I pay on an asset sale vs share sale in the UK?
Asset Sale: The purchase price is paid to the company, not you personally. Corporation tax is applied to the profit/gain made on the sale (minus allowable costs). You then face a second layer of tax when extracting funds from the company through dividends, pension contributions, or a Members' Voluntary Liquidation (MVL). This double tax structure means asset sales are generally less tax efficient for sellers.
Share Sale: You pay Capital Gains Tax (CGT) on the gain made from selling your shares. The consideration is paid directly to you as the shareholder. You may deduct your annual CGT exemption (£3,000 as of January 2026). If eligible, you can apply Business Asset Disposal Relief (BADR) to reduce the CGT rate on qualifying gains within the lifetime limit of £1 million. As of January 2026, the BADR rate is 14%, rising to 18% from 6 April 2026. You do not pay corporation tax on a share sale.
Can I choose which employees transfer in an asset sale?
No. Under TUPE 2006, you cannot pick and choose which employees transfer in an asset sale. Anyone assigned to the transferring business will automatically move over to the buyer by law, on their existing terms and conditions. This is a mandatory protection to ensure employees' rights are preserved during business transfers.
Who is liable for historic debts in an asset sale?
You are. When selling assets, any historic liabilities that the company has remain within the business; they do not transfer to the buyer. This is one reason why asset purchases are typically offered by buyers when the complexity, risk, or cost of a share sale outweighs the expected value of the transaction. The buyer gets the protection of acquiring only selected assets without taking on the company's historic liabilities.
Do I need to re-paper clients in a share sale?
Not immediately as part of the share purchase agreement. In a share sale, client agreements remain with the same FCA-authorised company, so they do not need to be novated or re-papered during the transaction itself. The company continues to own the assets and hold the contracts. However, this is subject to any change in control consents in key third-party agreements. It is also likely that clients will eventually be moved from the acquired regulated entity into the buyer's regulated business, and at that point client re-papering or consent may be required.
Considering your next chapter?
At Chapters Capital, we specialise in financial planning and wealth management M&A.
Whether you are considering a sale, merger, or want to learn more about buyers in the space, please contact one of our professional associates today for a confidential, no-obligation consultation.
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