Planning Your Exit: How to Leave Your Business on Your Terms

Building a successful business takes years of hard work. How you leave it  – and how much of that value you actually keep –  can come down to decisions made years before you are ready to go.

Exit planning is one of those topics that business owners consistently put off. There is always something more pressing. But the reality is that the earlier you start thinking about how you will eventually exit, the more options you have, the more tax-efficient the outcome can be and the smoother the transition will be for you, your team and your customers.

Whether you are planning to sell in two years or twenty, here is what you need to know.

Why Exit Planning Cannot Wait

A well-structured exit can make an enormous difference, not just to how much you walk away with, but to how the process unfolds. Good planning helps you:

• Maximise and protect the value you have built
• Structure the transaction in the most tax-efficient way possible
• Ensure continuity for your employees, customers and stakeholders
• Avoid the disruption, delays and costly mistakes that come from being unprepared

The options available to you – and how attractive each one is – often depend on decisions made long before the exit itself. That is why it pays to understand them early.

1. Sale of Company Shares

Selling your shares to a third party is one of the most common exit routes and for good reason. The business continues to operate, employees and customers face minimal disruption, and the sale proceeds come directly to you as the shareholder.

From a tax perspective, share sales are subject to Capital Gains Tax (CGT). For 2026/27, the rates are 18% for basic rate taxpayers and 24% for higher or additional rate taxpayers, with an annual exempt amount of £3,000.

If you meet the qualifying conditions, Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) can reduce your CGT rate to 18% on qualifying gains – a significant saving, subject to the lifetime limit.

One thing to watch out for is deferred consideration where part of the sale price is paid later, often through an earn-out arrangement linked to future performance. This can affect when your tax liability falls due, which reliefs you can claim, and your cash flow planning. Getting the structure right in advance is essential.

2. Sale of Trade and Assets

Rather than selling the company itself, some owners choose to sell specific assets – goodwill, intellectual property, customer contracts, equipment – while retaining the legal company structure.

This can suit buyers who want to cherry-pick what they acquire, but it often comes with less favourable tax treatment for the seller. Business Asset Disposal Relief is generally not available on asset sales and the proceeds sit within the company rather than going directly to you, which creates an additional step to extract them efficiently.

It is worth weighing this carefully against a share sale before assuming it is the simpler option.

3. Members’ Voluntary Liquidation (MVL)

If you are winding down a solvent company – perhaps because you are retiring, closing a holding company after a restructure, or simply no longer need the business – a Members’ Voluntary Liquidation can be a highly tax-efficient way to extract retained profits.

Rather than taking the remaining funds as dividends, which are subject to income tax, an MVL typically allows distributions to be treated as capital. This means shareholders may benefit from Capital Gains Tax treatment and, where the relevant conditions are met, potentially Business Asset Disposal Relief.

An MVL does require the involvement of a licensed insolvency practitioner, so there will be professional costs to factor in. However, for companies with meaningful retained profits, the tax saving can often outweigh the expense.

That said, an MVL is not always necessary. Where the total amount left to distribute to shareholders is £25,000 or less, the company can usually be closed using the strike-off route instead, with the final distribution still potentially treated as capital rather than income. This can be a simpler and more cost-effective option, as there is no need to appoint a liquidator. If the amount distributed exceeds £25,000, formal liquidation is generally required to secure capital treatment.

As always, the anti-avoidance rules should be considered carefully, particularly where shareholders plan to continue a similar trade or business after the company is closed.

4. Share Buyback by the Company

Sometimes the cleanest solution is for the company itself to buy back shares from a departing shareholder. This can be particularly useful where there is more than one shareholder, shareholders are exiting at different times, or there is no obvious external buyer for the shares.

For this to work, the company needs sufficient distributable reserves or funding, and it must comply with company law requirements. HMRC clearance is often sought in advance to confirm the expected tax treatment. If structured correctly, the transaction can be treated as a capital disposal and may qualify for Business Asset Disposal Relief, but the detail matters enormously here.

5. Management Buyout (MBO)

A management buyout (where the existing senior team buys the business from the current owners) can be one of the most satisfying exit routes. It preserves culture, maintains continuity and puts the business in the hands of people who already understand and care about it.

The challenge is usually funding. Management teams rarely have the personal capital to fund a full acquisition, so external financing – typically bank debt – is commonly brought in alongside a holding company structure. The legal and financial structuring involved is complex, and the management team will need strong professional support throughout the process.

For sellers, an MBO often provides a clean exit with a motivated buyer who has strong incentives to make the transition work.

6. Enterprise Management Incentive (EMI) Schemes

An EMI scheme is not strictly an exit in itself, but it can be a powerful tool in preparing for one. By granting tax-advantaged share options to key employees, you incentivise and retain the people who make the business valuable, while also creating a potential future buyer base.

If options are exercised and shares are later sold, gains can be subject to capital gains rates rather than income tax, making EMI schemes highly attractive for both employer and employee. Eligibility is subject to HMRC rules, and the scheme needs careful design and ongoing compliance to work as intended.

7. Employee Ownership Trust (EOT)

The Employee Ownership Trust model (made famous by John Lewis) allows you to sell your business to a trust held on behalf of your employees. It is an increasingly popular option for owners who want to preserve the culture and independence of what they have built, rather than selling to a competitor or private equity.

The tax advantages for sellers can be substantial. Employees benefit indirectly from the profits of the business, and the trust is typically funded over time by the company itself, meaning the seller receives payments in stages rather than a single lump sum.

If the legacy of your business matters as much as the financial return, an EOT is worth serious consideration.

Choosing the Right Path

There is no single right answer. The best exit strategy depends on your personal goals, your business structure, your timeline, and – critically – how much planning you have done in advance.

What is clear is that all of the options above work better with time on your side. Structures put in place years before an exit can significantly improve the tax position, widen the pool of potential buyers, and give you far greater control over how and when you leave.

Talk to Us

At Surrey Hills Accountancy, we work with business owners at every stage of the exit planning journey, from initial conversations about options to structuring transactions and coordinating with solicitors and other advisers.

If you would like to explore what a tax-efficient exit might look like for you, please get in touch by emailing [email protected].