Share sale or asset sale—tax considerations

Copyright © 2025 LexisNexis
Published by a LexisNexis Tax expert
Practice notes

Share sale or asset sale—tax considerations

Copyright © 2025 LexisNexis

Published by a LexisNexis Tax expert

Practice notes

The sale of a company's business can be structured as either:

  1. •

    a sale of assets owned by the company (an asset sale), or

  2. •

    a sale of shares in the company by its shareholders (a share sale)

In an asset sale, a buyer (or, as the case may be, seller) is able to pick and choose which assets and liabilities and which parts of the target business it acquires (or, in the case of the seller, sells).

In a share sale, ownership of the company owning and operating the target business itself is transferred to the buyer. The company retains its assets (and liabilities) and continues to operate the business under the buyer's ownership.

A buyer will generally prefer an asset purchase in order to avoid acquiring any unexpected and potentially unquantifiable liabilities of the company. A seller will usually prefer to sell shares of a company, giving it a clean break from the company and its business.

Although it is ultimately a commercial decision, whether the transaction is structured as an asset or

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Jurisdiction(s):
United Kingdom
Key definition:
Shares definition
What does Shares mean?

The CA 2006 merely provides that a share is a share in the company's share capital. A company's share capital comprises the number of shares issued by it to investors either on or after incorporation. Those investors then become the shareholders in the company. A shareholder’s shares are their personal property. By contrast, the assets of a company are owned by the company itself. Owning shares does not entitle a shareholder to any property rights in the company's assets.

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