Selling Your Domiciliary Care Agency: Tax on the Sale and How to Prepare

The short answer: what tax you pay when you sell a domiciliary care agency

Sell the shares in your domiciliary care company and you pay Capital Gains Tax (CGT) on the gain, with Business Asset Disposal Relief (BADR) cutting the rate to 18 percent on the first £1 million of qualifying lifetime gains from 6 April 2026, and 24 percent applying above that. That single sentence covers the tax on most home care exits, because most agencies trade through a limited company and most owners sell the shares.

There is more to it than the rate, though, and the parts around the rate are where the money is won or lost. Two things decide your final position: the deal structure you agree with the buyer, and how well the agency is prepared before anyone opens the books. A specialist care accountant earns their fee on both. We look after the tax, payroll and compliance side for home care providers every week, so this is written from the seller's chair, not the textbook.

Selling a care business is not the same as selling a shop. The Care Quality Commission (CQC) sits over the whole transaction, HMRC treats a genuine trading company favourably for CGT, and the buyer's due diligence will comb through three years of payroll for minimum wage and travel-time exposure before they part with a penny. For the bigger picture on the numbers behind a home care business, our healthcare and social care accountants page and our guide to domiciliary care agency profit margins are the natural companions to this one.

You can read HMRC's own position on the relief in the gov.uk guidance on Business Asset Disposal Relief.

Share sale or asset sale: the choice that changes your tax bill

A share sale usually costs you less tax than an asset sale, because you pay one layer of Capital Gains Tax on the shares rather than corporation tax inside the company and then a second tax when you take the cash out. That single-versus-double layer is the heart of the whole decision.

In a share sale you sell the company itself. The buyer takes on the whole entity, including its CQC registration, its contracts, its staff and, importantly, its history and liabilities. You pay CGT on the gain, BADR can apply, and the cash lands in your hands after one tax charge.

In an asset sale the company sells its trade and assets: the goodwill, the client list, the brand, the systems. The company pays corporation tax on any gain on those assets at 19 to 25 percent, and then you face a second tax charge when you extract the net proceeds, either as a dividend or as a capital distribution on winding the company up. Two charges on the same money is why sellers instinctively prefer share deals.

Buyers tend to pull the other way. An asset deal lets a buyer cherry-pick what they want, leave known liabilities behind, and often claim relief on any goodwill they acquire. So the structure becomes a negotiation, and the price frequently flexes to reflect who carries the tax. Getting a specialist involved early, ideally through our tax planning advisory service, means you go into that negotiation knowing your walk-away number after tax, not before it.

One more difference matters in care specifically. Because a CQC registration cannot move with an asset sale, an asset deal forces the buyer to register from scratch, which drags out the timetable and adds risk to completion. That practical friction pushes many care transactions toward a share sale even before the tax is considered. We come back to CQC and TUPE later.

Business Asset Disposal Relief: the 18 percent rate and the £1 million limit

Business Asset Disposal Relief taxes the first £1 million of qualifying lifetime gains at 18 percent from 6 April 2026, instead of the standard 24 percent higher rate. On a typical owner-managed home care agency, that is the single most valuable relief in the whole transaction, and it is easy to fall out of by accident.

The rate has moved twice in quick succession, so state the year clearly. BADR was 10 percent until 5 April 2025, rose to 14 percent for the 2025/26 tax year, and rose again to 18 percent from 6 April 2026. The £1 million lifetime limit has stayed the same throughout. Gains above the £1 million limit are taxed at the standard CGT rate, currently 24 percent for higher-rate taxpayers on shares.

To qualify on a sale of shares you need to satisfy every one of these on the date you sell, having done so for at least the two years before:

• You hold at least 5 percent of the ordinary share capital and 5 percent of the voting rights.
• You are an officer or employee of the company (a director counts).
• The company is a trading company, not an investment company. A genuine domiciliary care agency that delivers care trades, so this is rarely a problem.
• You are also entitled to at least 5 percent of the profits available for distribution and of the assets on a winding up, or you meet the alternative test based on proceeds if the company were sold.

Do not overlook the annual exempt amount. For 2026/27 the CGT annual exempt amount is £3,000, so the first £3,000 of gains is tax-free before BADR applies to the rest. And note the deadline: a BADR claim for a 2026/27 disposal must be made by 31 January 2029, normally through your Self Assessment return.

The maths is easiest to see on a worked example. Take a founder selling the shares in her home care company for £600,000, with a negligible base cost. The chart below walks the £600,000 down to the cash she actually keeps.

What your domiciliary care agency is actually worth

A domiciliary care agency is usually valued on a multiple of its adjusted annual profit, and the multiple rises with a Good or Outstanding CQC rating, a strong private-pay fee mix and steady delivered care hours. That is the sentence buyers work from, and every word in it is a lever you can move before you sell.

In practice we see most independent home care agencies change hands at roughly 3 to 5 times adjusted annual profit (often described as adjusted EBITDA, meaning earnings before interest, tax, depreciation and amortisation). The multiple is not a fixed law. It is a judgement about how safe and how transferable your profit is, and a well-run agency with private clients can attract a higher multiple than a same-sized agency living on a single council contract.

The word "adjusted" is doing quiet work. Before a buyer applies a multiple, your profit is normalised: an above-market owner's salary is added back, one-off costs are stripped out, and any personal expenses running through the company are removed. Done properly, normalising the accounts can lift the profit figure the multiple is applied to, which is where a specialist adds real money rather than just filing the return.

The four things that move a home care valuation most

Buyers pay for certainty of future cash. These are the operational realities that decide your multiple:

• CQC rating. A Good or Outstanding rating from the Care Quality Commission signals a business a buyer can run without a regulatory fire to fight. A Requires Improvement rating is a discount, sometimes a deal-breaker.
• Payer mix. Private-pay and self-funding clients usually carry better margins and stickier relationships than pure local-authority framework hours, so a healthy private-pay share lifts value.
• Delivered care hours. Steady or growing weekly delivered hours, with low cancellation and good continuity, is the clearest proof that the revenue is real and will still be there after you leave.
• Staff retention and compliance. Low carer turnover, sponsor-licence stability where relevant, and a clean minimum-wage and travel-time record all reduce the buyer's perceived risk. High turnover or a minimum-wage question mark pulls the multiple down fast.

If you want to understand the profit number the multiple gets applied to, our guide on what a healthy domiciliary care margin looks like is the place to start, because a thin or volatile margin is the most common reason a valuation disappoints.

Getting sale-ready: the two to three years before you sell

The best time to prepare a domiciliary care agency for sale is two to three years before you list it, because a buyer's due diligence looks back over three years of accounts, payroll and CQC compliance, and the record you present is the record you are stuck with. A rushed sale off messy books almost always sells for less, or falls through in diligence.

Think of the run-up as removing the reasons a buyer would discount you or walk away. Every one of the points below is something a purchaser's advisers actively hunt for, so fixing them early both raises the price and protects the deal once it starts.

• Clean, consistent accounts. Three years of tidy, comparable management accounts and filed statutory accounts, with the profit clearly reconcilable to the bank and to delivered hours. Surprises in the numbers cost you trust and price.
• Sort out the minimum-wage and travel-time position now. This is the single biggest hidden liability in domiciliary care. If travel time between calls has not been paid, or rolled-up holiday pay has been handled loosely, a buyer will price the risk against you or demand an indemnity. Our guide on self-employed versus employed carers and status risk covers the neighbouring trap that catches agencies who treat carers as self-employed.
• Document your contracts and clients. Written local-authority and private-client agreements, packages that transfer with the business, and a clear picture of concentration so no single payer looks like a cliff-edge.
• Normalise the owner's pay and strip personal costs. The earlier your accounts reflect a true, arms-length cost of running the business, the higher the adjusted profit a buyer applies the multiple to.
• Protect your CQC rating. Book any actions from your last inspection well before you go to market. A rating drop mid-sale can retrigger a whole negotiation.

Beware one tax trap that surfaces when the price is partly paid over time. If part of the price is a deferred sum or an "earn-out" tied to how the business performs after completion, the CGT treatment depends on whether that future amount is fixed or contingent, and an earn-out linked to you staying on and working can be recharacterised as employment income taxed at income tax and National Insurance rates instead of the far lower CGT and BADR rates. That is a structuring question to settle before you sign heads of terms, not after.

The whole journey, from getting sale-ready to the tax falling due, runs roughly like this:

CQC, TUPE and the handover on completion day

Your CQC registration does not transfer with the business, so on a share sale the buyer notifies the Care Quality Commission of the change of control, and on an asset sale the buyer must register as a new provider before they can lawfully deliver care. This is the care-specific mechanic that catches sellers who assume a care business sells like any other.

In a share sale the company keeps its own CQC registration because the legal entity has not changed, only its ownership. The buyer still notifies CQC of the change in directors and control, but there is no re-registration gap, which is a big reason share deals dominate in this sector. You can see the notification requirements on the Care Quality Commission website.

In an asset sale the buyer is a different legal person, so they must register with CQC as a new provider or add the service to their existing registration before completion, and that typically takes around 10 to 12 weeks. Sensible asset deals are made conditional on that registration being in place, so the timetable stretches and the risk sits on the buyer to get regulated in time.

Staff are the other moving part. On an asset sale your carers transfer to the buyer automatically under TUPE (the Transfer of Undertakings (Protection of Employment) Regulations), on their existing terms and with continuity of service preserved. You must provide Employee Liability Information to the buyer at least 28 days before the transfer, and getting your payroll data clean well ahead of that is exactly why steady, accurate payroll matters long before you sell. On a share sale TUPE does not apply, because the employer company itself does not change, but the buyer still inherits every payroll liability sitting inside it, which is why the diligence is so thorough. Our guide to buying a domiciliary care agency shows exactly what the person across the table is checking, which is useful to read before you sell.

What this means for you: your next steps

If a sale is anywhere on your horizon, the highest-value work happens now, long before completion. The tax rate is fixed by law, but the size of the gain, the structure and the readiness are all in your hands.

1. Confirm you qualify for BADR. Check the 5 percent shareholding, the officer or employee status and the two-year clock. If your shareholding or role is borderline, fixing it takes time you may not have close to a sale.
2. Decide the likely structure early. Model the after-tax outcome of a share sale versus an asset sale so you know your real walk-away number before a buyer sets the frame.
3. Get three clean years of accounts and payroll. Start now if they are not already tidy. Diligence looks back three years, and travel-time and minimum-wage records are checked line by line.
4. Protect the value drivers. Guard your CQC rating, grow your private-pay mix, and keep delivered hours and staff retention steady.
5. Plan the CQC and TUPE handover. Know whether the buyer re-registers or notifies a change of control, and have your Employee Liability Information ready if it is an asset deal.

None of this is exotic tax planning. It is sequencing and preparation, and it is the difference between a clean high-value exit and a discounted, stressful one. You can check where your agency sits, and roughly what you would keep after tax, in a free call with LOYALS.