Protecting your wealth following a business sale – Our top tips

Selling a business is often the single largest financial event of an owner's life and is often an important part of their wealth-building and retirement plans.  

After years of building value in your business, the sale itself is only the beginning of an owner’s journey to creating lifelong and intergenerational wealth.  

Turning a business into liquid wealth brings a new set of decisions and getting the first year after completion right can shape your finances for decades to come.

Plan the structure of the sale before you sign

Business Asset Disposal Relief (BADR) remains one of the most valuable reliefs available to owners when looking to reduce their Capital Gains Tax liabilities from a sale, but it has become less generous in recent years.

The BADR rate has risen from 10 per cent before October 2024 to 14 per cent in 2025/26 and now stands at 18 per cent for the 2026/27 tax year onwards, available on qualifying gains up to a lifetime limit of £1 million.

Any gains above that limit are taxed at the standard rates of 18 or 24 per cent depending on your income, so it isn’t something that can be overlooked during a sale.

The way a deal is structured, including the balance between cash, deferred consideration and earn-outs, can also materially affect when and how much tax falls due.

This is worth reviewing with your adviser well before heads of terms are agreed, not after completion, as your options for maximising value from a sale will diminish quickly.

How to invest business sale proceeds

It is common for sale proceeds to sit in cash or to be reinvested into a single asset such as property, in the months following completion.

Having built wealth in one place for years, many owners are naturally inclined to do the same again.

However, a well-diversified pension and investment portfolio, spread across equities, bonds, property and alternative assets, reduces the risk of a single setback undoing years of hard work.

Here are some of the avenues for your wealth to consider:

• Pension contributions – Use pension carry forward to shelter a meaningful portion of proceeds and claim tax relief on contributions from unused allowances in the previous three tax years.
• ISA allowances – A stocks and shares ISA allowance of £20,000 per person, per year, offers a simple and tax-efficient home for part of the proceeds.
• Funds: Held directly through a General Investment Account, ETS and other funds let you spread your money across a broad range of businesses or entire markets, such as America's S&P 500. Because a GIA has no tax wrapper, any gains may be subject to income tax or capital gains tax, but the potential for higher returns often justifies their use.
• Investment bonds: Onshore and offshore investment bonds let you invest across a range of funds within a single wrapper, offering tax deferral rather than lower risk in themselves. Offshore bonds in particular can suit those with fluctuating income or plans to move abroad, since gains are typically only taxed on withdrawal rather than year by year.
• EIS and VCT – Enterprise Investment Schemes and Venture Capital Trusts can offer income tax relief and, in the case of EIS, deferral of capital gains, though both carry higher risk and should only form part of a wider strategy.
• Trusts – For larger sums, family trusts can help manage how and when wealth passes to the next generation, alongside your own income needs.
• Family Investment Companies – A FIC is a private limited company set up specifically to hold and manage family wealth, such as investment portfolios, property or cash, rather than to trade. Used well, an FIC, can combine Inheritance Tax planning, family governance and investment management within a single, interconnected structure.

How you invest your money post-sale will likely depend on your attitude to risk and own goals, which is why it is important to discuss your plans with an independent financial adviser.

Guard against lifestyle inflation

A large lump sum can create pressure, both internal and external, to spend quickly, but you do not want to devalue your investment of time and capital in a business.

Building a clear spending plan before the funds arrive and resisting major purchases in the first few months gives you time to make considered decisions rather than reactive ones.

How can we help?

Selling a business can create life-changing opportunities, but turning a successful exit into lasting financial security requires careful planning. Decisions made in the months following completion can have a significant impact on tax efficiency, investment performance, retirement planning and intergenerational wealth transfer.

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The information included in this article may be subject to changes in taxation following its publication. This article is intended for informational purposes only and does not constitute advice. Tax treatment depends on individual circumstances and may be subject to change in the future.

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