The single most important number in any practice sale is not the headline price. It is what you keep after tax. Two firms can agree an identical figure and one owner walks away with materially more than the other, purely because of how the deal was structured and when the tax advice arrived. Getting this right is not clever accounting; it is understanding a small number of rules and applying them before you sign anything.
This is a plain-English guide to the tax that lands when you sell a UK accountancy or professional-services firm. It is general information only. Every rate and threshold below should be treated as the position as at the 2026/27 tax year and confirmed with a qualified tax adviser for your own circumstances, because these figures move and have been moving quickly.
When you dispose of your practice, or of shares in the company that owns it, Capital Gains Tax (CGT) applies to the gain — broadly the sale proceeds less what the asset cost you and less allowable costs of sale. For a practice built up over decades from little or no base cost, the gain and the proceeds are often close to the same thing, which is why the CGT position deserves attention long before completion.
For most gains, the main CGT rates are 18% for gains falling within the basic-rate band and 24% above it, as at the 2026/27 tax year — check the current position. There is an annual exempt amount that shelters a small slice of gain each year, but on a whole-firm disposal it is immaterial to the overall outcome.
Business Asset Disposal Relief (BADR), the relief most sellers of professional firms rely on, was until recently called Entrepreneurs' Relief. It offers a reduced CGT rate on qualifying business disposals, subject to a lifetime limit of £1 million of gains per individual. It is a lifetime allowance, not an annual one, so if you have used part of it on an earlier disposal, only the balance remains.
The crucial point for anyone selling now is that the BADR rate has been climbing. It was 10% for many years; it rose to 14% for disposals on or after 6 April 2025; and it rises again to 18% for disposals on or after 6 April 2026. So for a completion in the 2026/27 tax year, the BADR rate is 18% — the same as the lower main CGT rate, which means the relief is now worth far less on higher-rate gains than it once was, and delivers nothing at all against basic-rate gains. As always, treat this as the position as at the 2026/27 tax year and check the current position with your adviser before relying on it.
Qualifying for BADR is not automatic. Broadly, you need to have owned the business, or held the requisite shareholding and been an officer or employee of the company, for a minimum period before disposal. The conditions differ between sole practitioners, partners and company shareholders, and small facts — a shareholding just under the threshold, a role that ended too early — can quietly disqualify the relief. This is exactly the sort of thing to check a year or two out, not on the eve of signing.
How your firm is owned shapes the whole transaction. There are two broad routes.
The two routes carry different tax outcomes for both sides, and the reliefs, timing and paperwork differ accordingly. There is no universally "better" structure — it depends on the entity, the parties and what each side is trying to achieve. What matters is that the choice is made deliberately, with advice, rather than defaulting to whatever the first draft heads of terms happen to propose. Our note on selling your accountancy practice walks through how these routes sit within the wider sale process.
Few practice sales are all cash on day one. A large part of the value is often paid over time, frequently as an earn-out linked to client retention or future fee income. This changes not just how much you receive but when and how the tax is charged — and it is one of the most misunderstood areas of a deal.
Where the deferred amount is fixed and simply paid later ("ascertainable" consideration), you are generally taxed up front on the full value, including sums you have not yet received — which can leave you owing tax on money still to arrive. Where the future payment depends on things not yet known, such as fees the acquired book will generate over the next two or three years ("unascertainable" consideration), a different mechanism applies. Following the principle established in Marren v Ingles, the right to receive that uncertain future money is itself treated as an asset with an estimated value at the point of sale. You are taxed on that estimated value now; then, when the actual payments come in, you make a second CGT calculation on the difference between what you estimated and what you received. In short: an uncertain earn-out can create two taxable events, not one, and the numbers rarely match.
None of this is a reason to avoid an earn-out — they are a sensible way to bridge price expectations. But the drafting of the earn-out clause directly drives the tax treatment, which is why it should never be agreed in isolation from your adviser. Our explainer on how earn-outs work covers the commercial side in more detail.
Where a firm is genuinely jointly owned by spouses or civil partners — for example both are partners, or both hold shares — each has their own annual exempt amount and, potentially, their own £1 million BADR lifetime limit. Transfers between spouses are generally made on a no-gain/no-loss basis, which can allow a gain to be shared across two sets of allowances rather than concentrated on one. This has to reflect real, properly documented ownership and be arranged well ahead of a sale, not retrofitted at the last minute, or HMRC may simply disregard it. Done correctly and early, it is one of the most effective and legitimate ways to reduce the overall bill on a family-owned practice.
Tax on the sale itself is only part of exit planning. Pension contributions can be a valuable and tax-efficient way to extract value in the years leading up to a sale, and the point at which you draw a pension interacts with your other income and your overall position. The rules on contributions, allowances and access are detailed and personal, so treat this only as a prompt to have the conversation early with a suitably qualified adviser — it is not something to leave until the deal is on the table.
The recurring theme here is timing. Once heads of terms are signed, the structure — asset or share sale, cash or earn-out, who sells what — is largely fixed, and the tax outcome is fixed with it. Almost every meaningful planning opportunity, from qualifying for a relief to sharing gains across spouses to shaping an earn-out sensibly, has to be in place before that point. The cost of good advice a year out is trivial against the tax difference it can make. Our guidance on preparing your firm for sale sets out the practical groundwork worth doing well ahead of any approach.
Founder Capital acquires and backs accountancy and professional-services firms, so we see how these decisions play out on both sides of the table. We are happy to talk through what a sale might look like for your firm — but the tax numbers themselves must always be confirmed by your own adviser.
This article is general information as at the 2026/27 tax year and is not tax, legal or investment advice. Founder Capital is not FCA-authorised. Rates, thresholds and reliefs change and depend entirely on your circumstances — take specific advice from a qualified tax adviser before acting on anything here.
