What is an Asset Sale; an SME guide

kamfaulkner
Oct 3
2 min read

If you’re buying or selling a business in the UK, you’ll need to decide on a structure. One of the most common options is an asset sale; but what does that actually involve?

This guide explains asset sales in plain English: what they are, when they’re used, and what buyers and sellers need to watch for.

What is an asset sale?

In an asset sale, the buyer purchases specific assets (and sometimes certain liabilities) from the business. The business itself stays with the seller.

The buyer chooses what they want to acquire
Assets are transferred individually (e.g. stock, contracts, IP, premises)
The company structure doesn’t transfer

In short: The buyer gets the business, not the company.

Why choose an asset sale?

That said, asset sales can be more complex to execute than a share sale. You can read more about the differences between the two in our full guide here: Share Sale vs Asset Sale: A practical guide for SME buyers and sellers

Key features of an asset sale

Area	What happens in an asset sale
Legal structure	Buyer acquires business assets, not shares
Who’s the seller?	The company that owns the business
What transfers?	Only agreed assets and liabilities
VAT	May apply unless sale qualifies as a going concern (TOGC)
Stamp duty	May apply on land/property transfers
Employees	Transfer automatically under TUPE
Contracts & leases	Must be assigned or novated individually

When is an asset sale the right choice?

An asset sale is often used when:

The buyer wants to avoid legacy risks.
The business isn’t operated through a limited company.
Only part of the business is being acquired.
There are tax advantages for the buyer.

You’ll often see asset sales in:

Trade sales of divisions or product lines.
Distressed or insolvent company sales.
Buyer-led processes where risk is high.

When is a share sale better?

Asset sales aren’t always practical. A share sale might be better if:

The business has complex contracts or leases that are hard to transfer.
Continuity is important (e.g. regulated businesses).
The whole company is being acquired,

In those cases, a share sale offers a cleaner legal handover.

Tax on an asset sale (2025/26 and beyond)

What to watch out for

Summary

In an asset sale, the buyer gets the business, but not the company. It can be a great way to avoid risks and access tax reliefs, but it comes with more admin and transfer steps.

Sellers can retain parts of the company or extract value in stages. But watch out for double tax and TUPE risks.

Not sure which route is right for you? Let’s talk.

📩 info@orbitlegal.co.uk | 📞 0115 6777095 |

Disclaimer

This content is for general information only and doesn’t constitute legal, accounting, financial, or tax advice. It’s based on the law of England & Wales and was correct at the date of publication, but the law and guidance can change. Reading this page doesn’t create a solicitor–client relationship with Orbit Legal. Please take advice on your specific circumstances before acting. Get advice for your situation by contacting Orbit Legal at info@orbitlegal.co.uk or 0115 6777095.