You have spent years building an Amazon or Shopify brand, and now a broker or aggregator has made an offer. The headline number looks great. The question that decides what you actually keep is the one most sellers leave too late: how much of it goes to HMRC?
How you sell matters as much as what you sell for. A share sale and an asset sale are taxed differently. Business Asset Disposal Relief can cut the rate on up to £1 million of gains, but the rate has just changed again. And the way your business is valued affects both the price and the tax.
This guide walks through the tax on selling a UK ecommerce business in the 2026/27 tax year: the difference between selling shares and selling assets, how Business Asset Disposal Relief works now, how online brands are valued, and the planning that should start well before you sign. Every rate and rule here is grounded in current HMRC guidance, with sources at the end.
How is the sale of my ecommerce business taxed? {#how-taxed}
When you sell a business you have built, the profit you make on the sale is usually a capital gain, not trading income. That means Capital Gains Tax (CGT), not Income Tax, on the difference between what you sell for and what the business cost you to build (your base cost), after allowable expenses.
The exact tax depends on three things: your business structure, what you actually sell, and which reliefs you qualify for.
- If you trade as a sole trader, you are selling the underlying business assets: the brand, goodwill, stock, customer lists, Amazon and Shopify accounts, and any equipment. Each is a CGT disposal.
- If you trade through a limited company, you can either sell the company's shares (you, the shareholder, make the gain) or have the company sell its assets (the company is taxed, then you extract the cash). These two routes are taxed very differently, which is the next section.
Everyone gets a CGT annual exempt amount of £3,000 for 2026/27 (gov.uk Capital Gains Tax rates and allowances). Beyond that, the rate you pay turns on whether Business Asset Disposal Relief applies.
A quick word on what is not a capital gain. If you are simply selling off inventory in a closing-down sale rather than selling the business as a going concern, that is trading income taxed in the normal way. Selling the business itself, brand and all, is the capital event this guide is about.
Asset sale or share sale: which is better? {#asset-vs-share}
If you run your ecommerce business through a limited company, this is the single biggest decision, and the buyer and seller usually want opposite things.
A share sale means the buyer purchases your company shares. You, the shareholder, make a capital gain on the shares. The company carries on unchanged, taking its history, contracts and (importantly for Amazon sellers) its Seller Central account and selling history with it.
An asset sale means the company sells its assets, the brand, goodwill, stock and listings, to the buyer. The company is taxed on that gain, and you are then left with cash inside the company that you still need to extract, usually as a dividend or on winding the company up, which is a second tax point.
Here is the tension in practice:
| Share sale | Asset sale | |
|---|---|---|
| Who is taxed | You, on the share gain | The company, on the asset gain |
| Tax points | Usually one | Two (company, then extraction) |
| BADR available | Yes, if you and the company qualify | On your share/extraction gain, conditions apply |
| Buyer's view | Inherits all company history and liabilities | Cleaner, picks the assets, leaves old liabilities behind |
| Amazon account | Transfers with the company | May need a fresh account or transfer approval |
Sellers usually prefer a share sale: one tax point, and Business Asset Disposal Relief can apply to the whole gain. Buyers (especially aggregators) often prefer an asset sale because they avoid inheriting unknown liabilities. The structure that lands is a negotiation, and it has a real tax cost attached, so model it before you agree heads of terms.
For sole traders there is no share to sell. You are always making an asset disposal, and the goodwill in your brand is typically the largest single gain.
What is Business Asset Disposal Relief and do I qualify? {#badr}
Talk to an e-commerce accountant →
Business Asset Disposal Relief (BADR), formerly called Entrepreneurs' Relief, reduces the rate of Capital Gains Tax on qualifying business disposals. It is the most valuable relief most ecommerce founders will ever claim, and it is capped.
The lifetime limit is £1 million of qualifying gains (gov.uk Business Asset Disposal Relief). That is a lifetime allowance across all your qualifying disposals, not a per-sale figure. Gains above it are taxed at the normal CGT rates.
To qualify, broadly, the conditions must be met throughout the two years up to the date of sale:
- Selling your business as a sole trader or partner: you must have owned the business for at least two years.
- Selling shares in your company: the company must be a trading company (or holding company of a trading group), you must be an employee or officer, and you must hold at least 5% of the ordinary shares and voting rights, with entitlement to at least 5% of profits or sale proceeds (the "personal company" test). The shares and your officer/employee status must have been held for at least two years.
(gov.uk Business Asset Disposal Relief eligibility.)
Two points catch ecommerce sellers out, and both are worth flagging clearly because they are technical and easy to get wrong.
First, the two-year clock. If you incorporated your sole-trader business recently, or only recently issued yourself enough shares to clear 5%, you may not have held the qualifying position for the full two years yet. Selling early can forfeit the relief.
Second, goodwill on incorporation. If you transfer your business to a close company in which you (and connected persons) hold 5% or more, gains on the goodwill transferred on or after 3 December 2014 do not qualify for BADR (gov.uk Business Asset Disposal Relief helpsheet HS275). This is anti-avoidance, and it means "incorporate then immediately sell the goodwill to my own company at full BADR" does not work. These points are genuinely fact-specific, so get them checked before you act.
What rate of Capital Gains Tax will I actually pay? {#cgt-rate}
This is where the recent changes matter, because the BADR rate has moved two years running.
The BADR rate has risen in steps: it was 10% on disposals up to 5 April 2025, rose to 14% from 6 April 2025, and rose again to 18% for disposals on or after 6 April 2026 (gov.uk Capital Gains Tax rates and allowances). For any sale completing in the 2026/27 tax year, the BADR rate is 18%.
Gains that do not qualify for BADR (including anything above the £1 million lifetime limit) are taxed at the main CGT rates. For 2026/27 those are 18% within your remaining basic rate band and 24% above it for assets other than residential property (gov.uk Capital Gains Tax rates and allowances).
| Type of gain (2026/27) | CGT rate |
|---|---|
| Qualifying for BADR (up to £1m lifetime) | 18% |
| Non-BADR gains, basic rate band | 18% |
| Non-BADR gains, higher/additional rate | 24% |
One technical trap on timing. If you sign an unconditional contract before a rate-change date but complete after it, HMRC's anti-forestalling rule generally treats the disposal as taking place on the completion date, not the contract date, so you cannot lock in an older, lower rate by signing early (HMRC Capital Gains Manual CG64174). This is a fast-moving, technical area, so confirm the position for your own deal before relying on a date.
You can sketch the headline numbers with our capital gains tax calculator, but the structuring and relief eligibility need a proper review, which is what our tax advisory service is for.
How is an Amazon or Shopify business valued? {#valuation}
Tax is only half the story. The price itself is usually set by a multiple of profit, and the cleaner your numbers, the higher and more defensible that multiple.
Online businesses are most often valued on a multiple of SDE (seller's discretionary earnings) or EBITDA (earnings before interest, tax, depreciation and amortisation). SDE adds back the owner's salary and genuinely discretionary or one-off costs to show the real earning power of the business to a new owner. Brokers and aggregators then apply a multiple, typically expressed in months or years of that figure.
What moves the multiple up for an ecommerce brand:
- Clean, separated financials. A business with its own bank account, accurate bookkeeping and clear margins is worth more than one tangled up with personal spending.
- Diversified revenue. Reliance on a single hero product, one sales channel, or one supplier is a discount. A brand spread across Amazon, Shopify and other channels de-risks the buyer.
- Defensible position. Registered trademarks, Brand Registry, owned customer data, and genuine reviews all add value.
- Stable, documented operations. Standard operating procedures, reliable suppliers and low owner-dependence make the handover credible.
What pulls it down: account health warnings, suspended listings, hijackers, declining trends, thin or inconsistent records, and tax that has not been kept straight. Note that valuation multiples are commercial and set by the market, not by HMRC, so treat any "typical multiple" as a moving target rather than a fixed rule.
In practice, the single best thing you can do for your sale price is to have credible, separated, up-to-date accounts that a buyer's due-diligence team can trust. That is true whether you sell on Amazon, Shopify, or both, and it is a recurring theme across our work with ecommerce sellers.
Illustrative example: selling a limited company FBA brand {#worked-example}
Illustrative example. Priya owns 100% of the shares in a limited company that runs her Amazon FBA homeware brand. She incorporated it more than two years ago, she is the sole director, and the company is a trading company, so she meets the BADR conditions. She agrees a share sale completing in August 2026, in the 2026/27 tax year.
The figures, simplified:
| Item | Amount |
|---|---|
| Sale price for the shares | £900,000 |
| Base cost (what she paid for the shares) | £100 |
| Annual exempt amount (2026/27) | £3,000 |
| Chargeable gain after allowance | £896,900 |
Her whole gain of £896,900 is within the £1 million BADR lifetime limit, and the sale completes in 2026/27, so the BADR rate of 18% applies.
CGT due: £896,900 x 18% = £161,442, leaving her with roughly £738,558 from the sale.
For contrast, had the same gain been taxed at the main higher rate of 24% with no relief, the bill would have been about £215,256. The relief saves her in the region of £53,800 here, which is exactly why qualifying for BADR, and not tripping the two-year or 5% conditions, is worth getting right well before completion.
This is a deliberately simple illustration. A real deal involves deal costs, possible earn-outs, working-capital adjustments and the precise contract terms, all of which affect the gain and the timing. The point stands: structure and eligibility decide the tax, so plan them early.
What should I do before I sell? {#before-you-sell}
The best tax outcomes are built in the 12 to 24 months before a sale, not in the week you sign. A short checklist:
- Confirm your BADR eligibility now. Check the two-year ownership, the 5% shareholding, your officer/employee status, and the trading-company test. If a condition is not yet met, the timing of your sale may need to flex.
- Decide share sale vs asset sale early. It changes who is taxed and how many times. Build it into your heads of terms, not after.
- Get your accounts and bookkeeping clean. Separated finances lift both your valuation and the speed of due diligence.
- Tidy the company. Surplus cash, investment assets, or non-trading activity inside the company can put the trading-company status (and therefore BADR) at risk.
- Watch the timing. The tax year of completion sets the BADR rate, and anti-forestalling rules limit clever date games. Model the after-tax proceeds before you commit.
Get these right and you keep more of the price you negotiated. Get them wrong and a six-figure relief can quietly disappear.
Frequently asked questions {#faqs}
Do I pay Capital Gains Tax when I sell my ecommerce business?
Usually yes. The profit on selling a business you have built is normally a capital gain, taxed under Capital Gains Tax rather than Income Tax. You get the annual exempt amount of £3,000 for 2026/27, and the rate depends on whether Business Asset Disposal Relief applies. Selling stock in a closing-down sale, rather than the business as a going concern, is trading income instead.
What is the Business Asset Disposal Relief rate for 2026/27?
For disposals on or after 6 April 2026 the BADR rate is 18%, up from 14% in 2025/26 and 10% before 6 April 2025. It applies to up to £1 million of qualifying gains over your lifetime, provided you meet the conditions throughout the two years before the sale.
Is it better to sell my company's shares or its assets?
It depends, and the buyer and seller often want different things. Sellers usually prefer a share sale because there is a single tax point and BADR can apply to the whole gain. Buyers often prefer an asset sale to avoid inheriting the company's history and liabilities. An asset sale also leaves cash inside the company that you still have to extract, creating a second tax point. Model both before you agree terms.
How are Amazon and Shopify businesses valued?
Most online businesses are valued on a multiple of SDE (seller's discretionary earnings) or EBITDA. The multiple rises with clean separated financials, diversified revenue across products and channels, registered trademarks, and low owner-dependence. It falls with account health issues, concentration risk, declining trends and messy records. Multiples are set by the market, not by HMRC.
Will incorporating just before a sale get me Business Asset Disposal Relief?
Not on the goodwill. If you transfer your business to a close company you control, gains on goodwill transferred on or after 3 December 2014 do not qualify for BADR. The relief also needs the qualifying conditions met for two years, so incorporating shortly before a sale generally does not give you full BADR. This is a technical area worth checking with an adviser before acting.
When do I report and pay the tax on selling my business?
A gain on selling shares or business assets is reported through Self Assessment, with the Capital Gains Tax due by 31 January after the end of the tax year of the disposal. Residential property has its own separate 60-day reporting and payment rule, but that does not normally apply to selling an ecommerce trade. Keep records of your base cost, deal costs and the contract dates.
Sell well, keep more
Selling your ecommerce business is the moment all those years of work pay off, and a few structuring decisions decide how much of it you actually keep. The relief, the share-versus-asset choice, and the timing all need to be settled before you sign, not after.
If you are weighing up an offer on your Amazon or Shopify brand, talk to us before you commit. Our tax advisory team will check your BADR eligibility, model the after-tax proceeds on each structure, and make sure your accounts stand up to a buyer's due diligence. Get in touch through our contact page for a confidential conversation.
