The short answer: two taxes, two trade-offs
A share purchase and an asset purchase are taxed differently at entry, and they carry different risks and administrative steps afterwards. In brief: a share deal attracts 0.5% stamp duty on the share consideration but you acquire the company and everything it has ever done. An asset deal attracts SDLT on any property at non-residential and mixed-use rates up to 5% but you take a cleaner slate on the trade. For a pharmacy, two further twists matter: the NHS contract and GPhC registration mechanics differ by structure, and goodwill (which dominates pharmacy pricing) attracts restricted corporation tax relief on a company purchase.
Neither structure is universally better. The right answer depends on the deal, the seller's history, and your tax position. This post maps the comparison so you can have a productive conversation with your advisers.
What a share purchase is
You buy the shares in the company that owns and operates the pharmacy. The company itself does not change: it continues to hold its assets, its liabilities, its contracts, its HMRC registrations, and its trading history. You become the new shareholder; the company carries on as before, subject to any notifications or consents required by third parties.
The practical consequence is that you inherit everything the company has ever done. Outstanding VAT assessments, PAYE underpayments, supplier disputes, lease obligations, and any contingent legal claims all come with the deal. This is why a share purchase involves detailed due diligence and why warranties and indemnities from the seller are not optional extras: they are the contractual mechanism for allocating risks the buyer cannot fully verify before completion.
The entry tax is low. You pay stamp duty at 0.5% on the consideration paid for the shares. On a £1,000,000 share deal that is £5,000. There is no SDLT on a share purchase, regardless of whether the company owns freehold premises.
What an asset purchase is
You buy specified assets from the company or sole trader: the stock, equipment, goodwill, and (if applicable) the freehold or leasehold premises. The seller retains the corporate entity and its history. You start with a new legal vehicle and take only what you have agreed to acquire.
The trade-off is the entry tax on property. If the deal includes freehold premises, or a leasehold with a premium, SDLT applies at non-residential and mixed-use rates. Those rates run to 5% above £250,000 of consideration. On a pharmacy premises purchase of £500,000, the SDLT bill could be materially higher than the stamp duty on a share deal covering the same underlying value.
Where the pharmacy is leasehold with no premium (rent only), SDLT is assessed on the net present value of the rent, typically a smaller number. And if there are no premises in the deal at all (for example a short lease with no capital value), the property SDLT question is removed. In that scenario the asset deal's entry tax can be very competitive.
The tax on entry: a worked illustration
The table below uses an illustrative pharmacy acquisition at £1,200,000 total consideration, with £400,000 attributed to freehold premises in the asset deal scenario. All figures are illustrative only; your transaction will have different values and a different property allocation.
| Share purchase | Asset purchase | |
|---|---|---|
| Total consideration | £1,200,000 | £1,200,000 |
| Tax base for entry duty | Share consideration: £1,200,000 | Property element only: £400,000 |
| Rate / calculation | Stamp duty at 0.5% | SDLT: non-residential rates (0% on first £150,000, 2% on £150,001 to £250,000, 5% above £250,000) |
| Entry tax (illustrative) | £6,000 | £9,500 (0 + £2,000 + £7,500) |
| Entry tax differential | Share deal cheaper at entry by ~£3,500 in this example | |
This illustration is for structure comparison only. The entry tax gap narrows or reverses depending on the property value, lease terms, and total consideration. Where premises are leasehold with no capital premium, the asset deal's SDLT exposure can fall substantially. Where the freehold value is high, the SDLT on an asset deal rises steeply. Run the actual numbers for your deal.
The pharmacy twist 1: NHS contract and GPhC continuity
For a general business, the share-vs-asset structuring decision is mostly a tax and liability question. For a pharmacy it also engages the NHS contract and the GPhC registration, which operate differently depending on how the deal is structured.
Market entry in England is governed by the NHS (Pharmaceutical and Local Pharmaceutical Services) Regulations 2013. The NHS contract is the asset: it is what generates the reimbursement and remuneration income. Continuity of that contract through completion is essential.
On a share deal, the company continues to hold the NHS contract. You are buying the company, not assigning the contract. The company's contractor status does not change at the point of share transfer, but you must notify the relevant NHS body of the change in ownership. The exact notification and consent requirements depend on the NHS region and the contract type; this is a completion mechanic to plan in advance, not an afterthought.
On an asset deal, the NHS contract does not automatically transfer with the assets. The buyer typically needs to apply for, or be assigned, the pharmaceutical listing for the premises. The 2013 Regulations set out the grounds and process. This can take time and carries some market-entry risk that does not exist in a share deal. Legal advice specific to the contract type and NHS region is essential before structuring a pharmacy acquisition as an asset deal.
GPhC registration of the premises and the requirement for a superintendent pharmacist (where the owner is a body corporate) also have their own steps on a change of ownership. On a share deal, the registered premises and the superintendent arrangement continue under the same company. On an asset deal, re-registration and new superintendent arrangements need to be in place before the pharmacy can operate under new ownership. Again, the mechanics differ from a general business transfer and need specialist planning.
Neither structure makes NHS contract or GPhC continuity impossible, but the path and the risks differ. The share deal is generally lower-risk on contract continuity; the asset deal requires more regulatory groundwork.
The pharmacy twist 2: goodwill and the CT-relief restriction
Pharmacy pricing is dominated by goodwill. The NHS contract, item volume, and location drive a pharmacy's value far more than its tangible assets. Goodwill typically accounts for a large proportion of the total consideration. This makes the tax treatment of goodwill in the buyer's hands a material planning question.
On a share purchase, the goodwill sits on the seller's balance sheet inside the company you are buying. As the new shareholder you do not acquire the goodwill directly in your hands, so the question of CT relief on goodwill in the buyer's hands does not arise in the same way. The goodwill remains a company asset; whether and how it is amortised within the company is a separate accounting question.
On an asset purchase, you (or your new vehicle) acquire the goodwill directly. Under current HMRC rules, corporation tax relief on goodwill is restricted and only available in limited cases at fixed rates. The generous amortisation deductions that were once available on acquired goodwill are no longer the default. Given that goodwill can be a very large number in a pharmacy transaction, the restricted CT relief is a real after-tax cost that must be modelled when comparing the two structures.
The practical effect is that an asset deal can look cheaper on entry tax (particularly where there are no premises) but more expensive after-tax on the goodwill element, because the buyer cannot deduct the goodwill cost at the pace they might expect. The interaction between SDLT savings, goodwill CT relief, and the buyer's corporation tax rate needs to be worked through for the specific deal before structure is finalised.
The full side-by-side comparison
| Dimension | Share purchase | Asset purchase |
|---|---|---|
| Entry tax on consideration | 0.5% stamp duty on shares | SDLT on property at non-residential rates up to 5%; no stamp duty on non-property assets |
| History and liabilities inherited | All company history: tax liabilities, VAT, PAYE, legal claims, supplier disputes. Warranties and indemnities are the backstop. | Only what is specified in the asset purchase agreement. Prior liabilities stay with the seller's entity. |
| NHS contract continuity | Company retains the contract; change-of-ownership notification required. Lower completion risk. | Contract does not pass with assets automatically. Buyer must apply or be assigned the listing under the 2013 Regulations. Higher completion risk; requires advance planning. |
| GPhC registration steps | Registered premises continue under the same company. Superintendent arrangements continue subject to any personnel changes. | Re-registration and new superintendent arrangements needed before the pharmacy can trade under new ownership. See GPhC guidance on pharmacy ownership changes. |
| Goodwill CT relief (buyer) | Goodwill stays on the company's balance sheet. CT relief question is within the company's own accounts. | Buyer acquires goodwill directly. CT relief is restricted and only available in limited cases at fixed rates. Material cost given goodwill dominance in pharmacy pricing. |
| Due diligence depth | Must cover the whole company history: tax, employment, legal, regulatory. Higher due-diligence burden reflects the inherited risk. | Focused on the assets acquired and the contract transfer mechanics. Narrower scope but the NHS contract path requires specialist legal input. |
| Warranties and indemnities | Central to the deal. Seller warrants the company's history; indemnities cover specific identified risks. | Less extensive on historical liabilities, but the NHS contract assignment and GPhC re-registration steps need contractual protection. |
Which structure is usually right?
There is no universal answer. Both structures are used for pharmacy acquisitions, and the right one depends on the specific deal. The questions that typically drive the decision are:
- What is the property situation? A high-value freehold makes the SDLT on an asset deal significant. A short leasehold with no premium removes much of the entry-tax argument for a share deal.
- How clean is the seller's company history? A company with a complex PAYE history, pending VAT queries, or prior litigation creates inherited risk that may tip the buyer toward an asset deal despite the higher entry tax.
- How material is the goodwill CT-relief restriction? Where goodwill is a very large number (as it often is in a pharmacy), the restricted CT relief on an asset purchase can cost more over time than the SDLT saving at entry.
- How urgent is completion, and what is the NHS contract risk? A share deal offers a more straightforward path on contract continuity. If timeline pressure is real, the asset deal's NHS contract assignment process needs to be stress-tested with the NHS region before heads of terms are signed.
The worked illustration above shows a single scenario. Your deal will have different numbers, different property, and a different seller history. The correct structure is the one that produces the best after-tax outcome for your specific facts, after accounting for due diligence risk, goodwill CT relief, and NHS contract continuity.
For a full breakdown of the buying process from heads of terms to completion, see the pharmacy buyer's checklist. For the valuation mechanics that drive the goodwill number at the heart of both structures, see the pharmacy goodwill guide. If you are financing the acquisition, the first-time buyer finance guide covers how structure interacts with what lenders will fund.
The pharmacy purchase affordability calculator can help you stress-test the numbers at different consideration levels. Note that the calculator models affordability, not the tax on entry; use it as a scenario tool rather than a tax computation.
If you are at the structuring stage of a pharmacy acquisition, the decisions made now affect the entry tax, the after-tax cost of goodwill, and the NHS contract path through completion. Find out how we support pharmacy buyers or explore the pharmacy purchase accounting service for the full scope of work involved.