Yes, it may be possible to sell part of a business, but partial sales need careful planning. You must define exactly what is being sold, what stays behind, how contracts, staff, data, tax, VAT, assets and liabilities are handled.
Quick Answer
Yes, in many cases you can sell part of a business. This might mean selling a division, website, customer book, product line, branch, contract portfolio, equipment, stock, brand, premises-based unit or selected assets. The seller continues to operate whatever remains after the transaction.
A partial sale is usually structured as an asset sale — the buyer acquires specific, defined items rather than the whole company or its shares. But the variety of partial sale structures is broad, and the right approach depends on the specific business, what is being separated, and what both parties need.
The hard part of a partial sale is not typically the transaction mechanics — it is the separation itself. Defining clearly what transfers and what stays, ensuring contracts can move, managing any affected staff correctly, handling tax and VAT, and protecting the continuing business from disruption all require careful planning. GOV.UK guidance on selling a limited company notes that responsibilities differ depending on whether the entire shareholding is sold or the company is selling part of its business. The complexity increases significantly when the part being sold is intertwined with operations that continue.
This guide covers the main considerations for anyone thinking about selling part of a business in the UK. Professional legal, tax, accounting, employment and data protection advice is essential before any partial sale is agreed.
Contents
What does selling part of a business mean?
Selling part of a business means transferring only selected elements rather than the whole company or all of its assets. The seller retains the rest and continues to trade.
The part being sold might be defined by geography — a specific branch or territory. It might be defined by activity — a particular division, service line or product range. It might be defined by customer relationships — a specific customer book or contract portfolio. Or it might be defined by the assets themselves — a set of equipment, a stock holding, a website and domain, a brand, or a database.
In most cases, a partial sale is an asset sale rather than a share sale. The buyer acquires specific named assets and, in some cases, associated contracts and staff — but they are not acquiring the company. The company remains with the seller, along with all the rights, liabilities and obligations not expressly transferred. This distinction matters: in a share sale, the buyer acquires the entire legal entity including its history. In an asset sale, only what is specifically listed in the agreement transfers.
The seller may be motivated to make a partial sale for a variety of reasons: releasing capital from a part of the business they no longer wish to operate, simplifying the business to focus on its core, raising funds while retaining the main operation, or testing the water before a full exit. Whatever the motivation, the same principle applies — the separation must be precise, legally documented and practically manageable.
Examples of partial business sales
The range of partial sales that actually happen in the UK is wide. A web agency may sell its hosting book — recurring maintenance contracts with monthly billing — while retaining its design and development work. A café owner with two sites may sell one branch and continue running the other. A trades business may sell its maintenance-contract division, transferring customer agreements and the staff who service them, while keeping the project work.
An e-commerce seller may sell one brand or storefront, including the website, product photography, supplier relationships and inventory, while retaining a second brand. A manufacturer may sell a product line that no longer fits its strategy, along with the tooling, moulds and customer relationships associated with it. A recruitment agency may sell a sector desk — the client relationships, candidate databases and placed-staff records in a particular field — while keeping the rest of the agency.
Other examples include a salon selling a treatment-room business within a larger premises, a cleaning company selling its regional customer book to a local operator, a SaaS company selling one software product while retaining its other tools, and a wholesaler selling a specific customer list and stock line.
In every case, the buyer is acquiring something that the seller has defined and separated — not the whole — and that separation process is the most demanding part of the transaction.
What must be defined clearly
The sale agreement must be precise about what transfers and what does not. Ambiguity creates disputes. Everything that is not explicitly included should be treated as excluded, and ideally a schedule of excluded assets should also be listed to remove doubt.
The items that typically need to be addressed in the agreement include the specific assets included — equipment, vehicles, fixtures, stock, work-in-progress — and any assets expressly excluded. The trading name and any associated branding must be addressed: does the buyer acquire the right to use the name, or does the seller retain it? The website and domain must be expressly transferred if they are part of the deal. Social media accounts, email accounts and phone numbers all require specific allocation, as these are often tied to the seller's existing infrastructure.
Customer records, contracts with customers and contracts with suppliers must each be listed and their transfer addressed. Staff are a separate category, considered below. Equipment and stock require specific listing, with stock typically valued at or near completion. Work-in-progress needs a treatment agreed — whether it is included, valued separately or retained by the seller. The treatment of debtors and creditors outstanding at the time of completion must be agreed clearly. Customer deposits held by the seller — where customers have paid in advance — must be addressed, as these represent liabilities that may or may not transfer.
Licences, permits and intellectual property must be identified and their transfer considered. If the part being sold operates from a leased premises, the lease arrangements must be addressed — whether the buyer takes an assignment, enters a new lease, or operates from different premises. The handover period and what the seller will provide must be documented. Non-compete and non-solicitation obligations — protecting the buyer from the seller approaching the transferred customers or competing in the same space — are standard in most partial sales and should be specified in scope, duration and territory. Any liabilities associated with the part being sold must be allocated clearly, with a decision on which side bears pre-completion liabilities.
Contracts, customers and suppliers
Partial sales very often depend on whether the relationships being transferred can actually move. A customer book has limited value if the customers cannot be legally transferred to a new owner. A contract portfolio is not sellable if the contracts cannot be assigned.
Before agreeing a partial sale, every significant contract should be reviewed for assignability. Many commercial contracts contain clauses that prohibit assignment without the counterparty's consent, or that give the counterparty a right to terminate if the contract is assigned. Where customer consent is required, the seller will need to approach those customers and obtain it — a process that may cause some customers to reassess the relationship altogether.
Check also whether the contracts are held in the seller company's name or in the seller's personal name. If contracts are personal to the individual rather than the company, they may not be transferable at all without the customer's agreement to enter a new agreement with the buyer.
Where contracts are shared across divisions — for example, a single master service agreement covering multiple service lines — splitting the contract to enable a partial sale may require renegotiation with the counterparty. Supplier pricing may be dependent on volume that spans both the part being sold and the part being retained, meaning the buyer receives a lower volume and therefore less favourable terms than the seller currently enjoys.
Exclusivity clauses cut both ways: a supplier exclusivity agreement may prevent the seller from dealing with competing suppliers in the territory after the sale, or may not transfer at all if it was personal to the seller's company. Termination rights — clauses allowing the counterparty to exit if there is a change in the business — can make an apparently transferable contract non-transferable in practice.
These issues must be identified and resolved before the sale is agreed, not after.
Staff and TUPE
If part of a business is transferred to a new owner, employees who are assigned to that part of the business may be protected under the Transfer of Undertakings (Protection of Employment) Regulations 2006, commonly known as TUPE.
GOV.UK is clear that TUPE can apply when a business or part of a business changes hands. TUPE is not limited to whole-business transfers — it can apply to the sale of a discrete part of a business where an organised grouping of resources or employees transfers to the new owner. Whether TUPE applies in any specific case depends on the facts, and employment advice should be taken before the structure of the partial sale is finalised.
Where TUPE does apply, employees transfer to the buyer on their existing terms and conditions. The seller cannot dismiss employees because of the transfer. Both the seller and the buyer have information and consultation obligations to the affected employees, and these must be followed correctly. Failure to comply with the consultation requirements can result in claims from employees for compensation.
In a partial sale, identifying which employees are assigned to the part being sold is not always straightforward. Some employees may work across both the part being sold and the part being retained, requiring a decision about which side they transfer to, or whether contractual changes are needed. Owner-family labour — where a family member is employed informally — may create complications around contracts and TUPE that need to be addressed before completion.
Take employment advice early in the process, before the structure of the sale is agreed. The cost of resolving TUPE issues after a contract is signed is significantly higher than addressing them before.
Tax, VAT and TOGC
Partial business sales can create a range of tax and VAT considerations that require specialist advice before the transaction is agreed.
On the direct tax side, the seller will typically be subject to either Corporation Tax on chargeable gains (if the sale is made by the company) or Capital Gains Tax (if by an individual). Business Asset Disposal Relief may be available in some circumstances, reducing the rate of tax on qualifying gains. The rates applying to disposals are: 10% before 6 April 2025; 14% for disposals between 6 April 2025 and 5 April 2026; and 18% from 6 April 2026. Whether BADR applies to a partial sale — and to which elements of the consideration — requires specific tax advice, as the qualifying conditions are detailed.
For asset sales, the price will typically be allocated across different categories of asset — plant and machinery, stock, goodwill, intellectual property, customer relationships — and the tax treatment of each category differs. Goodwill and customer relationship values may give rise to chargeable gains, while stock is typically treated as a trading transaction. How the proceeds are ultimately extracted from the selling company — as salary, dividend or liquidation proceeds — has further tax implications that should be planned before completion.
On the VAT side, where a sale amounts to a Transfer of a Business as a Going Concern (TOGC), the sale may be outside the scope of VAT. TOGC treatment requires specific conditions to be met, including that the buyer intends to use the transferred assets to carry on the same kind of business. HMRC VAT Notice 700/9 covers the conditions for TOGC treatment in detail. The VAT registration threshold increased to £90,000 from 1 April 2024 — relevant where the buyer is not currently VAT-registered and the business being transferred generates revenue above that level.
Where deferred consideration is involved — for example, an earn-out based on future performance — additional complexity arises around when the gain crystallises and how it is valued. Tax advice should be taken before heads of terms are signed.
Data protection
Partial sales frequently involve the transfer of customer and client data — contact records, purchase histories, email addresses, demographic information — and UK data protection law applies to how that data is handled during the process and at completion.
The ICO's guidance on mergers and acquisitions is clear that where an organisational change means personal data transfers to a different or additional data controller, both the seller and buyer must consider carefully how personal data is shared during due diligence and transferred at completion. This includes assessing the original purpose for which the data was collected, the lawful basis for sharing it with the buyer, and whether the intended use after completion is compatible with that original purpose.
In practical terms, this means that customer lists and databases should not be shared casually or early in the process. At initial stages, anonymised or aggregated summaries are usually sufficient for a buyer to assess what they are acquiring. Detailed personal data should only be shared with properly screened buyers who have signed an NDA and who are at an advanced stage of the process. Records should be kept of what data has been shared, with whom, and when.
After completion, the buyer will typically become the new data controller for the transferred customer data. They may need to update their privacy notices to reflect the addition of this data. Depending on the circumstances, customers may need to be informed that their data has transferred to a new controller. These obligations should be addressed as part of the completion planning, not left as an afterthought.
Do not treat the sale of customer data as a straightforward commercial transaction. It carries legal obligations that apply regardless of whether the deal is otherwise complete.
Valuation issues
Valuing a part of a business is often harder than valuing the whole, because the part rarely operates in full commercial isolation.
The starting point is the revenue and profit directly attributable to the part being sold. This requires a separated profit and loss account — an analysis that isolates the income, direct costs and identifiable overhead of the part being transferred, as distinct from the costs and income of the remaining business. Where shared overheads exist — management time, premises costs, central administration, shared systems — these must be allocated in a way that is fair to both sides and that reflects what the buyer will actually need to spend after completion.
Customer concentration is a particular concern in partial sales. If the part being sold derives most of its revenue from one or two large customers whose contracts are not secured, or who may choose not to follow the business to the new owner, the maintainable revenue may be significantly lower than the historical figures suggest.
Separation costs can erode value. The buyer may need to set up new systems, acquire their own premises, recruit additional staff, or invest in marketing to replace customer relationships that were partially shared with the retained business. These costs should be reflected in the buyer's offer even if they are not visible in the seller's accounts.
The non-compete and non-solicitation restrictions agreed as part of the sale will also affect value. A broad restriction that prevents the seller from competing in the same space for a meaningful period adds value for the buyer. A narrow or short restriction reduces it. Both sides should understand what restrictions are being agreed and what they mean for their respective positions after completion.
Where goodwill is being valued, the quality and transferability of customer relationships matter enormously. A customer book in which all relationships are personal to the current owner, with no formal contracts, is worth considerably less than one with documented, contractually committed customer relationships that are not dependent on any individual.
Partial sale checklist
Exactly what is being sold is defined, including a specific asset schedule.
Assets excluded from the sale are also listed to avoid ambiguity.
Key contracts reviewed for assignability and change-of-control clauses.
Customer consent requirement assessed and plan in place.
Supplier arrangements checked — continuity of terms confirmed or renegotiated.
Employment advice taken on TUPE applicability and which staff transfer.
Information and consultation obligations for affected staff identified.
Data protection review completed — customer data sharing and transfer planned.
VAT and TOGC treatment reviewed with a tax adviser.
Corporation Tax, CGT and BADR implications assessed and advice taken.
Goodwill and intellectual property clearly defined and allocated.
Stock and work-in-progress valuation and treatment agreed.
Debtors and creditors treatment agreed — who collects, who pays.
Lease and premises arrangements resolved.
Handover plan prepared, including customer introductions and systems transfer.
Non-compete and non-solicitation terms agreed in scope, duration and territory.
Impact of the separation on the remaining business assessed.
Completion date and payment structure agreed.
FAQs
Is selling part of a business always an asset sale?
Usually, but not always. In most partial sales, the buyer acquires specific assets rather than shares in the company. But structures vary — in some cases, a hive-down into a subsidiary followed by a share sale may be the preferred approach. A solicitor and tax adviser should advise on the optimal structure for each specific situation.
Can I sell a customer list?
Possibly, but data protection law, contract terms and customer consent issues all need to be considered. A customer list is personal data within the meaning of UK GDPR, and its transfer to a new controller must be lawful, purposeful and documented. Whether customers can be transferred may also depend on the contractual basis on which they are customers. Some may need to be informed or asked to consent before their data and relationship are passed to a new owner.
Does TUPE always apply to a partial sale?
Not automatically — it depends on the facts. TUPE applies where an organised grouping of employees or resources that constitutes an economic entity transfers to a new owner while retaining its identity. Whether that test is met in any specific case requires employment advice. Taking that advice early, before the sale is structured, is strongly recommended.
Does VAT apply to a partial sale?
It may not, if the transfer qualifies as a TOGC. Where TOGC conditions are met, the sale is outside the scope of VAT entirely. Where they are not met, VAT may apply to some or all of the assets being transferred. The VAT treatment should be reviewed by a tax adviser and agreed between the parties before completion. Incorrectly treating a transfer as outside the scope of VAT when it is not can create a liability for the seller.
Can I sell one branch and keep the rest?
In principle, yes. But lease, staff, contracts, brand and financial records must all be properly separated. If the branch operates under the same lease as another part of the business, the lease will need to be dealt with — through assignment, subletting, or entering a new direct lease. If the brand is shared across branches, the right to use the brand needs to be expressly licensed or allocated. If accounts are not currently separated by branch, producing the financial evidence a buyer needs will require additional work.
What if the business I am keeping relies on some of what I am selling?
This is a genuine complication that needs to be thought through carefully before the sale is agreed. If the retained business will lose a shared resource — whether that is staff, systems, premises, or supplier pricing — the impact on the continuing business must be assessed and managed. Transitional service agreements, where the seller continues to provide a service to the buyer (or vice versa) for a defined period after completion, are sometimes used to manage this kind of interdependency.
Key takeaways
Yes, you can sell part of a business — but it is rarely as straightforward as it appears. The separation is the hard part: defining precisely what transfers and what stays, ensuring contracts can move to the buyer, identifying and managing any staff who transfer under TUPE, handling customer data in line with data protection obligations, and addressing the tax and VAT implications before the transaction is agreed. Partial sales require the same professional advice as full sales — and in some cases more, because the complexity of disentangling part of an operating business from the remainder creates issues that do not arise in a clean, whole-business transaction. Both buyer and seller should have independent legal, tax and employment advice before heads of terms are signed.
Related resources
Important disclaimer
Buy a Business Ltd is a marketplace, not a broker, corporate finance adviser, M&A adviser, law firm, accountant, tax adviser, lender, valuation firm, employment adviser, property adviser or investment adviser. Information, guides, checklists and examples on this site are for general guidance only and do not constitute legal, tax, financial, investment, lending, valuation, employment, property, data protection, brokerage, corporate finance, M&A or regulated advice.
Buying, selling, financing, structuring or transferring a business can have legal, tax, employment, property, data protection and commercial consequences. You should seek independent professional advice before making an offer, listing a business, signing documents, forming a company, taking over a lease, sharing sensitive data or completing a business purchase.
Sources and useful references
GOV.UK: Get information about a company
GOV.UK: Selling your business — your responsibilities
GOV.UK: Running a limited company — directors' responsibilities
GOV.UK: Corporation Tax trading and non-trading
GOV.UK: Renting a business property — tenant responsibilities
GOV.UK: Business transfers, takeovers and TUPE
GOV.UK: Business Asset Disposal Relief
GOV.UK/HMRC: VAT registration threshold changes
ICO: Due diligence when sharing data following mergers and acquisitions