Business Sale Agreement UK: Asset Purchase Template in Word and PDF

It is the contract by which the owner of a business sells the assets of that business, rather than the shares of a company. On a share sale the company, with all its history, stays the same and only its owner changes. On an asset purchase the buyer chooses what it takes: goodwill, equipment, records, online accounts, supply contracts and, if agreed, stock and customer debts. Everything left out stays with the seller, including its tax bills, loans and creditors. The exception is staff: TUPE moves the employees and their employment liabilities to the buyer whether it wants them or not. Most buyers of small businesses prefer this route, and it is the only one when the seller is a sole trader or a partnership, which have no shares to sell.

It is a private contract, never filed at Companies House, and it cannot transfer land. A lease is assigned by a separate deed of assignment with the landlord's written consent, and a freehold passes under its own property contract and transfer on HM Land Registry form TR1. Our template says this in its recitals and builds the timetable around it. The UK business documents and company templates cover the other paperwork owners and directors need.

Three bodies of law shape every business sale agreement UK practitioners draft. The first is employment law. Under the Transfer of Undertakings (Protection of Employment) Regulations 2006, employees assigned to the business move to the buyer automatically, with their pay, terms and length of service (regulation 4). A dismissal whose sole or principal reason is the transfer is automatically unfair (regulation 7); one made for an economic, technical or organisational reason entailing changes in the workforce is not. The seller must hand over the employee liability information in writing at least 28 days before completion (regulation 11), and both employers must inform, and where measures are planned consult, the employees' representatives long enough before the transfer (regulation 13). Under regulation 13A, an employer with fewer than 50 staff, or a transfer involving fewer than 10 employees, may inform and consult each employee directly where there are no appropriate representatives and none has been invited to stand.

VAT comes next. If the seller is registered, the sale is normally outside the scope of VAT as a transfer of a going concern under section 49 of the Value Added Tax Act 1994 and article 5 of the Value Added Tax (Special Provisions) Order 1995. The buyer must carry on the same kind of business and be, or become, VAT registered, and where opted property goes with the business, it must also opt to tax and notify HMRC and the seller by the relevant date. HMRC explains its practice in VAT Notice 700/9 on transferring a business as a going concern.

Where a director buys from his or her own company, or a sole trader sells to a company of which he or she is a director, section 190 of the Companies Act 2006 may require a members' resolution for a substantial non-cash asset. Stamp duty no longer applies to goodwill (Finance Act 2002, section 116) and now reaches only shares and securities (Finance Act 2003, section 125), so the only transaction tax on a business sale falls on any premises.

The classic case is a retiring owner selling a shop or café to a buyer who keeps the name, the staff and the customers. The buyer pays for goodwill and equipment, the lease is assigned with the landlord's consent and the stocktake happens the evening before completion. A second situation is the sole trader who incorporates and sells the trade to his or her own new company. TUPE still applies to any staff, and the director conflict rules can bite on the buying company.

Partnership break-ups follow the same route when one partner buys the trade. Online businesses are sold this way too, where the value sits in domain names, marketplace accounts and the customer list, so log-in credentials and data protection replace keys and fixtures. Where the premises are let, read the existing commercial lease agreement terms on assignment before agreeing a timetable, because an absolute bar on assignment changes the whole deal. One edge case: a seller company in difficulty should sell at a documented fair price, since a liquidator or administrator can ask the court to unwind a sale at an undervalue under section 238 of the Insolvency Act 1986.

The assets are listed by category, with schedules for equipment, contracts and digital assets, and the seller sells them with full title guarantee. Cash, tax refunds, any land and, unless you choose otherwise, the book debts stay with the seller, and the other debts of the old business stay behind as excluded liabilities backed by an indemnity, apart from future obligations under the contracts taken over and those TUPE moves to the buyer. The price is split between intellectual property, goodwill and equipment, which matters for capital allowances under section 562 of the Capital Allowances Act 2001.

Money mechanics come next: an optional deposit held by a stakeholder, payment in full or by instalments with interest on late payment, retention of title to the equipment until the last instalment, an optional personal guarantee and an optional retention held back for warranty claims. Employees are dealt with under TUPE, with wages and holiday apportioned at completion and cross-indemnities so that each side pays for its own period. The information you give the buyer usually mirrors each employee's statement of written particulars under section 1 of the ERA 1996.

The warranties cover title, accounts, licences, litigation, contracts, data protection, tax and solvency, within a claims period of 12, 18 or 24 months, a minimum claim and an overall cap, and the seller gives a restrictive covenant whose length and area you set yourself.

This business sale agreement UK template is drafted for England and Wales only. Scotland has its own contract, property and conveyancing law, and Northern Ireland has separate employment and land registration rules, so a business or staff based there need a different document.

Within England and Wales, the difference appears when premises change hands. In England the buyer of a notifiable interest files a stamp duty land tax return with HMRC within 14 days of the effective date (Finance Act 2003, section 76). In Wales, land transaction tax is collected by the Welsh Revenue Authority, with a return due within 30 days beginning with the day after the effective date (Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017, section 44). TUPE, VAT and the Companies Act 2006 apply identically on both sides of the border.

You start by identifying the seller (sole trader, partnership or limited company) and the buyer (individual or company). The form then asks for the trading details, the assets, the price and its split, stock, customer debts, any deposit and the payment terms. Choose instalments with a guarantor and a guarantee clause and a third signature block appear, with clause numbers adjusting themselves.

The questionnaire then covers VAT registration, the premises (lease, freehold or none), completion, employees, warranty limits and the non-compete. Two buyers going into business together through a new company should also sign a shareholders' agreement for the new company before completion. Finally you choose a simple contract or a deed, check the full preview and download.

The most expensive mistake we see is treating TUPE as optional. Parties agree a completion date ten days away, the employee information never arrives, and months later a holiday pay claim from before the sale lands on the buyer. Send the employee information at least 28 days before completion when staff transfer. A close second is a careless price allocation: loading almost everything into goodwill invites an HMRC challenge, because the split must be just and reasonable, and the buyer loses capital allowances.

Premises cause the rest of the trouble. Sellers sign before asking the landlord, then discover the lease forbids assignment or that the landlord wants a guarantee; the template makes completion conditional on the licence to assign, with a long stop date. Another frequent error is forgetting that the buyer must be VAT registered for the going concern treatment to work, failing which VAT may be due on the price and the fallback clause puts it on the buyer. Finally, do not write a non-compete wider than the business really trades: a nationwide ban for a neighbourhood café will rarely survive the restraint of trade test.