Selling part of your business to investors
When investors buy most of your company, you often take part of the price in cash and the rest as shares in their new company. Tax on the cash is due now; tax on the shares waits until they're sold. We show both, and what your kept shares could be worth after tax when the investors sell (your second bite).
Your answer
Enter the price you're offered, the part you keep as shares and your other income to see your two bites.
About this calculator
For company owners told that investors will buy most of the company and that they must keep part of their shares in a new company the investors set up. It shows the tax on the cash you take now, the profit whose tax is put off on the shares you keep (Taxation of Chargeable Gains Act 1992, sections 127 and 135), and what those shares could be worth after tax when the investors sell.
If you qualify for the lower business rate (Business Asset Disposal Relief), it also compares putting the tax off with choosing to pay it now on the shares you keep too (section 169Q), and says which leaves more after both sales.
You type in the price, your share of it as shares, what your shares cost and your other income. It assumes you live in the UK for tax and uses today's rates for both sales. It doesn't handle loan notes, earn-outs, preference shares, fees or losses, a very small cash part (which can be taken off your cost instead), or the time value of money. It doesn't predict growth or recommend any deal.
What happens to your answers
We don’t keep them. Your answers go to our server to do the sums and aren’t stored or logged. If you copy a link to your answers, they’re in the link itself, so only share it with people you trust.
How it’s worked out
The price is split into cash and shares. The cash part takes the same share of what you paid as it is of the price, and the profit on it is taxed now. The rest of the profit waits, because the new shares take over the rest of your cost.
Tax on a profit: the part up to what's left of your £1 million lifetime limit is taxed at the lower business rate of 18% if you qualify, and uses up the basic-rate band first. The rest is taxed at 18% in what's left of the band and 24% above it, after the £3,000 yearly tax-free amount.
In the example, a £3,000,000 price with £100,000 paid and 40% kept gives £1,740,000 of profit on the £1,800,000 of cash: £356,880 of tax now, leaving £1,443,120. The shares kept, worth £1,200,000, carry a cost of £40,000. At 2.5 times today's value they sell for £3,000,000, with £709,680 of tax, so the second bite is £2,290,320.
Worked example
Your second bite is worth £2,290,320 after tax if the shares you keep reach 2.5 times today's value, on top of £1,443,120 in cash today.
2026/27 rates, also for the second sale · you live in the UK for tax · 40% kept as shares · tax on the kept shares put off · lower business rate now · shares worth 2.5 times today's value at the second sale · no lower rate at the second sale · same other income both times
| The price offered for your shares | £3,000,000 |
|---|---|
| Less what you paid for them | £100,000 |
| Your profit on the whole price | £2,900,000 |
| Paid to you in cash | £1,800,000 |
| Paid to you as shares in the new company | £1,200,000 |
| Cost that goes with the cash (cost × cash ÷ price) | £60,000 |
| Profit on the cash part | £1,740,000 |
| Profit taxed now | £1,740,000 |
| Less the yearly tax-free amount | £3,000 |
| Taxed at the lower business rate of 18% (Business Asset Disposal Relief) | £1,000,000 |
| Taxed at the higher everyday rate of 24% | £737,000 |
| Tax to pay now | £356,880 |
| Cash in your pocket today, after tax | £1,443,120 |
| Profit put off until you sell the shares you keep | £1,160,000 |
| What the shares you keep are worth today | £1,200,000 |
| Worth when the investors sell (2.5 times today's value) | £3,000,000 |
| Less what counts as their cost | £40,000 |
| Profit at the second sale | £2,960,000 |
| Less the yearly tax-free amount | £3,000 |
| Taxed at the higher everyday rate of 24% | £2,957,000 |
| Tax at the second sale | £709,680 |
| Your second bite, after tax | £2,290,320 |
Worked out using HMRC's Capital Gains Tax rates for the 2026/27 tax year and the rules for swapping your shares for shares in the buyer's company (Taxation of Chargeable Gains Act 1992, sections 127, 128, 135 and 169Q). Your growth figure is your own, not our forecast. Not legal or tax advice.
Questions people ask
Why is the tax on the shares I keep put off?
When you swap your shares for shares in the buying company, the law treats the new shares as the old ones, so no tax is due until you sell them. HMRC can refuse that if avoiding tax is one of the main purposes of the deal, so your accountant usually asks HMRC to clear it in advance. The cash part is a sale, so it's taxed now.
Should I pay the tax now on the shares I keep?
Only if you qualify for the lower business rate and would lose it by waiting. If the cash part already uses up your £1 million lifetime limit, paying now usually gains nothing and means paying tax on shares you get no cash for. The calculator shows both.
What if the investors sell for less than I hope?
Then the second bite is smaller, and could be less than the shares are worth today. Try a number below 1 to see. Investors are often paid back first, so the owners' shares can lose value faster than the company does.
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