How do you plan to sell or close your business?

Most owners end up doing one of these:

• Selling to a competitor, an investor, staff or someone already involved in the business.
• Closing the business, collecting what you are owed and selling any equipment. This is common for service businesses built around one person's skills.
• Passing it on to a family member, by sale or as a gift.

Which suits you depends on whether the business has value without you. That is worth finding out early, because building that value takes years.

A buyer is paying for future profit. They will usually look for:

• Steady or growing income, with records to show it.
• Profit that does not depend on you personally doing the work.
• Customers on contracts or repeat orders, spread over more than a few names.
• Written processes, so someone new can run things.
• Brand names, websites and other intellectual property clearly owned by the business.

If clients come to you for your own expertise, a buyer may pay little, because those clients may leave when you do. That is not a reason to give up on a sale. It is a reason not to rely on one for your retirement.

Most of these take time to build, which is why exit planning starts years ahead. Moving key clients onto written contracts, training someone to handle day-to-day work and keeping tidy accounts all raise what a buyer will pay. They also make the business easier to run in the meantime, and easier to keep going if you are ill or take time out.

A buyer will want to see several years of accounts. Clean records kept from the start, through a separate business account and proper bookkeeping, save a lot of work when that request comes. An accountant or business broker can give you a realistic idea of value before you commit to a plan.

Selling or giving away a business, or shares in one, can mean Capital Gains Tax on the gain. For 2026/27 the first £3,000 of total gains is tax-free. After that, the rate is 18% on gains within the basic rate band and 24% above it.

Business Asset Disposal Relief sets the rate at 18% on all qualifying gains for disposals from 6 April 2026, up from 14% in 2025/26. You can claim up to £1 million over your lifetime.

The main conditions for a sole trader are that you owned the business for at least 2 years up to the sale. If you close the business instead, the same applies and you must dispose of the assets within 3 years. For shares in your own company, you generally need at least 5% of the shares and voting rights and to have worked there as an employee or office holder for 2 years.

You claim through your Self Assessment return. For a sale in 2025/26, the deadline is 31 January 2028.

Timing can matter. The relief rate and Capital Gains Tax rates are set by the government and have changed several times, so check the rules for the tax year in which you actually sell. An accountant can work out the likely bill before you agree a price.

GOV.UK sets out the steps:

1. Tell HMRC you have stopped being self-employed, using the online service.
2. Send a final Self Assessment return with your income, expenses, capital allowances and final profit or loss, plus any Capital Gains Tax.
3. Check whether Business Asset Disposal Relief, overlap relief or terminal loss relief could reduce the bill.
4. Cancel your VAT registration if you are registered.
5. Close your PAYE scheme and send final payroll reports if you employ staff.

If your income will be £1,000 or less a year, you do not need to stay registered, though you can if you want to keep paying voluntary Class 2.

Many self-employed people expect the business to fund their retirement, either by selling it or by working longer. Neither is certain. Health, the market or a key client can change the picture quickly.

A pension builds up whatever happens to the business, with tax relief on the way in. You can usually take money from a private pension from age 55, which rises to 57 on 6 April 2028. If your exit date is close to that age, check when your money will actually be available. Our page on pension options covers how to pay in.