Capital gains tax on selling a facilities management company

After years of dedication, building a robust client base, and navigating the complexities of service level agreements, you have built a successful facilities management business. Perhaps you are now contemplating your next chapter, considering a sale to realise the value you have created. As you weigh your options, one significant consideration invariably comes to the forefront: Capital Gains Tax (CGT), the tax on the gain you make when you sell something for more than it cost you.

Understanding how CGT works on the sale of your business decides how much of the price you keep, and helps the sale go smoothly. It is a critical part of any plan to sell, and proactive planning can make a substantial difference.

Update, November 2026. The October 2026 Budget announced that the Business Asset Disposal Relief lifetime limit will fall from £1 million to £500,000 for qualifying disposals from the start of the 2027 to 2028 tax year in April 2027. Relief already claimed counts towards the limit, and the 18% rate does not change. For tax, the date of an unconditional contract normally counts as the date of disposal rather than completion, and specific rules will apply to contracts signed before the change that complete after it. Where this page quotes a different limit, rate or date, this note takes priority. Take advice on your own position. What the change means for owners.

What is Capital Gains Tax?

Capital Gains Tax is a tax on the profit you make when you sell an asset that has increased in value. When it comes to selling a business, this profit is typically the difference between what you originally paid for the company shares or assets, and the price you sell them for. The rates of CGT vary depending on the type of asset sold and your personal income, but for business owners, there are specific reliefs designed to reduce the tax burden.

Business Asset Disposal Relief (BADR)

For many facilities management owners, Business Asset Disposal Relief, formerly Entrepreneurs’ Relief, is the most significant relief available, because it cuts the rate of tax owners pay when they sell a company they work in. BADR taxes qualifying business gains at 18% for sales from Apr 2026 (it was 10% until Apr 2025 and 14% in the 2025/26 tax year). That is still a reduction on the main higher rate of CGT, which is 24% for gains above the basic rate income tax band.

To qualify for BADR, you must meet specific conditions. Generally, you need to have been an officer or employee of the company, holding at least 5% of the shares and voting rights, for a period of at least two years leading up to the sale. The company must also have been a trading company, or the holding company of a trading group. The lifetime limit for gains eligible for BADR is £1 million per individual. According to HMRC data, in the tax year 2021-22, BADR was claimed on over £12 billion of capital gains, highlighting its importance to business owners across the UK.

Given the nature of facilities management, with its often long-term contracts, recurring revenue streams, and a strong emphasis on hard and soft services, your business is likely to be viewed as a 'trading company', making it eligible for BADR, provided other conditions are met.

Factors Influencing CGT on Selling Your Business

Several elements can impact your CGT liability:

• Structure of the Sale

  Are you selling the shares of your company, or just its assets? Selling shares is usually more tax-efficient for the seller, as it typically qualifies for BADR. An asset sale, where the buyer buys what the company owns rather than your shares, is sometimes preferred by buyers but can lead to the company paying corporation tax on the gain, followed by income tax on distributions to shareholders, effectively creating a double tax charge.

• Timing of the Sale

  The tax year in which the sale contract is made can affect your personal tax position, particularly if you have other capital gains or losses. Careful timing can help optimise your annual allowances.

• Company Valuations

  A higher valuation naturally means a higher potential capital gain. While a good problem to have, it underscores the need for robust tax planning to minimise the impact of CGT. Factors like strong client retention, diversified service offerings, and efficient CAFM systems can significantly boost your valuation.

• Pre-Sale Planning

  Strategic actions taken well in advance of a sale can significantly reduce your CGT liability. This might include reorganising shareholdings, making pension contributions, or considering various forms of relief.

Why Professional Advice is Indispensable

CGT on a business sale is complicated, and the rules change. Take advice from a specialist. A specialist adviser can help you:

• Determine your eligibility for BADR and other reliefs.
• Structure the sale in the most tax-efficient manner.
• Forecast your potential CGT liability accurately.
• Identify any pre-sale opportunities to mitigate tax.
• Ensure all compliance requirements are met.

Keeping the CGT on your sale down can make a real difference to what you walk away with. Proactive planning, often beginning months or even years before a potential sale, is key.

If you are considering your options, the first conversation is free. Try the free calculator, then have a free first conversation with Simon or Emily.

Tax and legal advice should come from your own advisers, and it helps to know who you will need, and when to bring them in.