Selling a Property SPV: Share Sale vs Asset Sale

Two people can say "I am selling my SPV" and mean opposite transactions. In one, the shareholders sell their shares and the buyer takes the company whole, with its properties, mortgages, tax history and original base costs. In the other, the company sells the properties, banks the cash and the shareholders then face the separate problem of getting that cash out. The tax bills differ by tens of thousands of pounds on a single flat, and the route is usually settled in the first conversation with a buyer, long before anyone models it.

Nothing about the building changes between those two deals. The same house, the same tenant, the same rent, the same completion date, and a tax bill that can differ by more than £70,000 because of what the buyer's money technically bought. Sell the shares and you are taxed once, on a personal gain, while the company's own tax position simply carries on under new ownership. Sell the property and the company is taxed on its gain first, and then you are taxed again on getting the proceeds out of a company that now holds nothing but cash. The rest of this page prices both routes on the same £400,000 property, including the discount a buyer will ask for when they are the one inheriting your base cost.

Sell the company or sell the property? The decision in one table

For most sellers of a settled rental SPV the share-sale route wins, because it is taxed once rather than twice. The exception is a buyer who will not touch shares, and there are plenty of those. Here is the whole decision before the detail.

Question	Share sale	Asset sale
What is sold	Your shares in the company	The property, by the company
Who pays the tax	You, personally	The company, then you again on extraction
Layers of tax	One	Two
Buyer's transfer tax	0.5% stamp duty on the share price	Full SDLT, usually with the 5% surcharge
Buyer's base cost in the property	Inherited, your original cost	Stepped up to the price paid
Buyer's risk	Inherits the company's whole history	Buys the asset only
Typical price adjustment	Discounted for latent gains	Full market value
Legal complexity	High, share purchase agreement and warranties	Standard conveyancing
Usually preferred by	The seller	The buyer

Read the table as a negotiation map, not a verdict. The share-sale column is cheaper in tax for you and cheaper in transfer tax for the buyer, and that combined saving is the pot both sides are arguing over when the latent-gain discount is priced.

Share sale: capital gains tax on the shares, not the property

When you sell shares, you are disposing of a personal asset. The gain is your sale proceeds less what the shares cost you, which for most SPVs is the subscription price plus any later share capital you put in. It is not the gain on the property, and the property's own history is irrelevant to your personal computation.

The rate is the general capital gains tax rate for individuals, not a property rate, because shares are shares even when the company owns houses. In practice this makes no difference to the number for 2026/27: gains on non-residential assets were aligned to the same 18 per cent basic-rate and 24 per cent higher-rate bands as residential property gains from 30 October 2024, per the gov.uk capital gains tax rates. The £3,000 annual exempt amount applies. Get the mechanism right even though the rate lands in the same place, because it drives everything else: the company has made no disposal, so it pays no corporation tax, and the property keeps the base cost it always had. That single fact is what creates the buyer's problem in the next section.

Timing is simpler too. There is no 60-day property return on a share sale by a UK resident, because you have not disposed of UK land. The gain goes in your self assessment return for the tax year of completion. Non-UK residents are a different case: an indirect disposal of a property-rich company can fall inside the UK charge and does require a 60-day return, so check residence before assuming the deadline.

Why Business Asset Disposal Relief rarely helps here

Sellers often arrive expecting an 18 per cent BADR rate on their shares. For a buy-to-let SPV, plan on not getting it. BADR requires a disposal of shares in a trading company, and letting property is an investment activity rather than a trade. HMRC's position on passive letting has never been in doubt, and the abolition of the furnished holiday lettings regime in April 2025 removed the one statutory route that treated some letting businesses as trading.

Where the company genuinely trades, a development business, or serviced accommodation with services extensive enough to amount to a trade on first principles, BADR can be in point at 18 per cent from 6 April 2026 (up from 14 per cent for 2025/26 and 10 per cent before that). That is a fact-specific test with no bright line, and it is decided by what the company actually did over the qualifying period, not by how the sale is structured. If there is a serious BADR argument, test it with advice before you market the company, not after you have signed heads of terms.

The buyer's problem: inherited latent gains

Because the company makes no disposal on a share sale, it keeps the base cost it has always had. If the company bought for £250,000 and the shares change hands when the property is worth £400,000, the buyer now owns a company holding a £400,000 property with a £250,000 base cost. The moment they sell it, corporation tax falls due on the whole £150,000 gain, including all the growth that happened on your watch and that you have already been paid for in the share price.

That is the latent gain, and buyers price it in by discounting their offer. How much of it they extract is a pure negotiation, influenced by how long they intend to hold, whether they ever intend to sell rather than refinance, and how competitive the process is. Extracting surplus cash from the company before completion is the main lever sellers have for shrinking the gap, and it has its own timing and tax traps, which our pre-sale extraction guide covers in full.

Stamp duty on shares: 0.5 per cent against full SDLT

This is the part that funds the negotiation. A buyer of shares pays 0.5 per cent of the consideration, charged as Stamp Duty Reserve Tax on an electronic transfer or as Stamp Duty on a paper stock transfer form, per gov.uk guidance on tax when you buy shares. On a paper stock transfer form the charge only bites where the consideration exceeds £1,000, which will never be in doubt on a real SPV sale. The 1.5 per cent rate exists but applies only to transfers into clearance services or depositary receipt schemes, so it has nothing to do with a private share sale.

Compare that with what the same buyer pays to acquire the property directly. A company buying residential property pays the standard SDLT bands plus the 5 per cent additional-dwellings surcharge on the whole price, and above £500,000 a non-natural person faces the 17 per cent flat rate unless a relief such as property rental business relief applies. On a £400,000 house the SDLT is roughly £30,000. On a share purchase at £231,250 the stamp duty is about £1,156.

Buyer's transfer tax on a £400,000 property	Amount
SDLT on a direct purchase by a company (bands plus 5% surcharge)	£30,000
Stamp duty at 0.5% on shares priced at £231,250	£1,156
Buyer's saving on the share route	£28,844

That saving is real money in the buyer's pocket, and it is the reason a well-run share-sale negotiation does not simply hand over the full latent-gain discount. The buyer is saving nearly £29,000 of transfer tax on this deal. A seller who concedes the whole £37,500 of latent corporation tax has given away more than the buyer gained, and has paid the buyer to take a tax charge they may never crystallise.

Asset sale: corporation tax, then a second layer to get the cash out

On an asset sale, the company sells the property and pays corporation tax on its own gain: 19 per cent where profits are below £50,000, 25 per cent above £250,000, with marginal relief between the two. On a £150,000 gain in a company with no other profits, the main rate applies to most of it. The company is then a cash box, and the cash still belongs to the company rather than to you.

Getting it out is the second layer. A dividend is taxed at 2026/27 rates of 10.75, 35.75 and 39.35 per cent above the £500 dividend allowance, which for most sellers of an appreciated portfolio means the additional rate on the bulk of it. Capital treatment is available on winding up, but only within limits. Under CTA 2010 s.1030A, distributions made in anticipation of dissolution are capital only where the total does not exceed £25,000, and s.1030B makes this all or nothing: exceed the cap and the whole amount becomes an income distribution, not just the excess. Above £25,000 of reserves, capital treatment needs a formal members' voluntary liquidation with a licensed insolvency practitioner.

The comparison between capital and income treatment on that final distribution, and how BADR interacts with it, is set out on our MVL capital versus income guide. The route choice itself, dormancy against strike-off against liquidation, is covered in how to close a property limited company. Both are the natural next step if your asset sale ends with an empty company you no longer want.

An honest reality check on the substantial shareholding exemption

SSE can exempt a company's gain on selling shares in a trading subsidiary, and it is genuinely valuable in the right structure. It is not available on a normal SPV sale, for two reasons: it exempts a gain made by a company, so an individual selling their own shares can never use it, and it requires the company being sold to be a trading company, which a buy-to-let SPV that simply owns and lets property is not. The narrow cases where it does apply, such as a corporate group selling a genuine development subsidiary, and the full eligibility test including the 10 per cent shareholding and 12-month holding requirements, are set out in our substantial shareholding exemption for property companies guide.

Why buyers prefer assets and sellers prefer shares

The tension is structural, not a matter of negotiating style. On an asset purchase the buyer gets a base cost equal to what they paid, so future growth is taxed from today's value rather than from your 2021 purchase price. They also buy the property and nothing else: no historical corporation tax position, no VAT history, no old leases or deposit-protection failures, no directors' past decisions. On a share purchase they get a discount and a stamp duty saving, but they are buying the company's entire past along with the roof.

That is why the price gap between the two routes is never just the latent tax. It reflects the base-cost step-up, the risk transfer, the warranty and indemnity package, and the higher legal cost of a share deal. It also explains a common outcome: an institutional or first-time buyer will simply refuse shares, and the choice is then between an asset sale at full value and no sale at all.

Worked example: a single-property SPV worth £400,000

The company bought a house for £250,000 five years ago, funded by £100,000 of subscribed share capital and a £150,000 interest-only mortgage. The property is now worth £400,000. There are no other assets or liabilities, and the shareholder is an additional-rate taxpayer with the annual exempt amount available.

Route A: share sale. The company's net asset value at market value is £400,000 less the £150,000 mortgage, so £250,000. The latent gain is £150,000, carrying £37,500 of corporation tax at the 25 per cent main rate. The buyer asks for that £37,500, the seller points at the buyer's £28,844 SDLT saving, and they settle at half, an £18,750 discount. The shares change hands at £231,250.

Share sale	Amount
Company net asset value at market value	£250,000
Latent-gain discount (50% of £37,500)	(£18,750)
Share price	£231,250
Less base cost of the shares	(£100,000)
Less annual exempt amount	(£3,000)
Taxable gain	£128,250
Capital gains tax at 24%	(£30,780)
Net to the seller	£200,470

The buyer pays £1,156 of stamp duty on top, and inherits the £250,000 base cost.

Route B: asset sale. The company sells the house for its full £400,000, with no discount, because the buyer gets a fresh base cost and takes none of the company's history. The company pays corporation tax on the £150,000 gain, repays the mortgage, and is left holding cash. Because the reserves are far above £25,000, capital treatment on the final distribution needs a members' voluntary liquidation; a strike-off would push the whole distribution into income under s.1030B.

Asset sale	Amount
Sale price of the property	£400,000
Corporation tax on the £150,000 gain, after marginal relief (24% effective)	(£36,000)
Mortgage repaid	(£150,000)
Cash left in the company	£214,000
Liquidator's fees (indicative)	(£3,000)
Distributed on winding up, less £100,000 share base cost and £3,000 exemption	£108,000
Capital gains tax at 24%	(£25,920)
Net to the seller	£185,080

The share sale nets £15,390 more, even after handing the buyer an £18,750 discount, because it is taxed once instead of twice. It is also the favourable version of the asset-sale route, because it assumes capital treatment on the way out. Taking the same £214,000 as a dividend instead costs materially more tax than the entire latent-gain negotiation, and the capital-versus-income comparison on that final distribution is worked through on our MVL capital versus income guide. Model the extraction cost with our property company extraction calculator before you settle on a route.

Two figures move the answer. If the buyer will only pay a heavily discounted share price, say the full £37,500, the shares change hands at £212,500, the tax is £26,280 and the net falls to £186,220, barely £1,100 ahead of the asset route. If your share base cost is low, because the company was capitalised with £100 of shares and a director's loan rather than £100,000 of share capital, the share-sale gain and the tax on it are both much larger, and the loan repayment comes out of the price tax-free instead. Model your own base cost before assuming either column.

Practical steps and where the time goes

A share sale is a corporate transaction, not a conveyance. Expect a share purchase agreement with warranties and disclosure, tax indemnities or a retention against unknown liabilities, buyer due diligence across the company's accounts, tax returns, leases and licensing, stock transfer forms and Companies House filings, and lender consent under the change-of-control clause in the mortgage, together with the release and replacement of any directors' personal guarantees. Two to four months is a realistic run, and the lender's consent is the item most likely to derail it. Both sides need their own solicitor and the legal cost is materially above a property sale.

If the exercise leaves you concluding that there is no buyer for the shares and no property you want to keep, the question becomes a closing question rather than a sale question. Our guide to closing a property limited company sets out the routes, and the wider structuring context sits on our property SPV hub.