Congratulations — and you are asking the right questions early, because a share sale is the cleanest exit for a seller, but the detail matters.
What a share sale means. You sell your shares to the buyer; the company itself — with its contracts, debts, employees, leases and liabilities — continues unchanged under new ownership. So yes: the company's debts and contracts stay with the company and transfer to the buyer along with everything else. That is the key difference from an asset sale, where the buyer cherry-picks assets and leaves liabilities behind.
The process. Expect heads of terms first, then due diligence — the buyer examines your accounts, contracts, tax affairs and legal position, so get your records in order now. Then comes the share purchase agreement (SPA) containing warranties (statements about the company's condition that you promise are true) and possibly an indemnity for specific known risks. Warranties are the main area where sellers get hurt, so have a solicitor negotiate them carefully and consider warranty and indemnity insurance if the buyer insists on extensive cover. Completion involves transferring the shares, updating the statutory books and Companies House, and settling the price — often part upfront, part deferred or earn-out.
How the price is taxed. For you personally, the sale of shares is a capital gains tax event: proceeds minus your base cost (what you paid or subscribed for the shares, plus certain costs). Where you have been an officer or employee, held at least 5% of the shares and voting rights for two years, and it is a trading company, Business Asset Disposal Relief may reduce the rate to 18% on qualifying gains for disposals from 6 April 2026 (GOV.UK). Without relief, gains are taxed at 18% and 24% depending on your income band, and your annual exempt amount (£3,000 for 2026/27) applies too.
Practical checklist: tidy your accounts and contracts now; check your shareholding will qualify for BADR well before completion; get an independent valuation; take both legal and tax advice before signing heads of terms; and plan the timing of completion around the tax year.
