When a GP partner retires or otherwise leaves a practice, two quite separate things happen at the same time, and they are easy to confuse. First, you receive what the partnership owes you, your capital account balance and, where you own one, your premises share. Second, your share of the partnership trade ceases for tax, even though the practice itself carries on. This guide joins those two threads into one practical page: what you actually get back, how the cessation of your notional trade works under the post-reform tax-year basis, whether any capital gains tax arises on a premises share, and the deed mechanics that keep an exit orderly.

This is the leaving partner's money-and-tax page. If you want the flip-side risk that the continuing partners carry, see the last man standing premises risk. If two whole practices are combining rather than one partner leaving, that is a different event, covered in our guide to GP practice mergers. And if you are not sure whether you are even in a full partnership, read expense sharing versus a full GP partnership.

Two separate things happen when you leave

The cleanest way to think about an exit is to keep the two threads apart. One thread is governed by the partnership deed and the accounts: what the partnership owes you, namely your capital account, your current account and any premises share. The other thread is governed by the cessation tax rules: your final tax position when your notional trade ceases. This page covers both, because mixing them up is where confusion and unexpected tax bills come from.

One thing is settled before we start. There is no NHS goodwill payment on the way out, because NHS GP goodwill cannot be sold. The prohibition has been in place since 1 April 2004 and currently sits in The Primary Medical Services (Prohibition on the Sale of Goodwill) Regulations 2019 (SI 2019/251). So an exit is about capital, premises and the cessation of your trade share, not a goodwill sale. For the full goodwill picture, see the complete GP partnership tax guide; we do not re-teach it here.

What the leaving partner gets back

Your capital account

Your capital account records your long-term stake in the partnership: the capital you introduced, your accumulated undrawn profits and your share of the net assets. On leaving, this balance is repaid to you under the terms of the deed. Many deeds repay it over a period rather than as a single lump sum, which spreads the cash impact on the continuing partners. Your current account, which tracks the shorter-term difference between your drawings and your profit share, is settled too, often on a different basis from the capital account.

There is no standard figure or repayment period here. The deed sets both, and the latest accounts fix the balances. If you want to understand how the capital and current accounts are presented before you read your own, see our guide to reading GP partnership accounts and current and capital accounts. The buy-in side, where an incoming partner pays for their share of the net assets, is the mirror image of your exit and is covered in buying into a GP partnership and capital parity.

It is worth being clear about the distinction between the two accounts, because leavers often focus on one and forget the other. The capital account is your long-term stake: it tends to move slowly, reflecting capital you put in, your share of the net assets and any profits formally transferred to capital over the years. The current account is more fluid, capturing the running difference between the profit allocated to you and the cash you have drawn. On an exit, both have to be settled, but they are often settled on different bases and different timetables. A deed might repay the capital account in instalments while clearing the current account more promptly, or vice versa. The only reliable guide is your own deed read against your latest accounts, which is why the first practical step on any planned exit is to confirm both balances and the basis on which each will be paid out.

Your premises share, if you own one

Surgery premises are frequently held in a separate property partnership or LLP, outside the medical partnership. That structure means you can leave the medical partnership but still hold, or have to sell, a premises share, and that can be a separate transaction running on its own timetable. The continuing partners or an incoming partner may buy out your share. The valuation is property-specific and usually surveyor or District Valuer assessed, so there is no standard figure to quote.

The income support that attaches to the property shapes the economics of any buy-out. Owner-occupiers typically receive notional rent on a current-market basis, while some older arrangements still run on the legacy cost rent scheme. For the ownership picture, see owning versus renting GP surgery premises, and for the standing liability the remaining partners carry, see the last man standing premises risk.

What you do not get: NHS goodwill

It is worth saying once more, because it is the single biggest difference from, say, a dental exit. There is no NHS goodwill to sell when you leave. The only goodwill that can ever feature is genuinely private, non-NHS goodwill, which is usually small or nil in an NHS-led practice. Everything of value that changes hands on your exit flows through the capital account, the premises share and the settlement of your current account. The detail on the goodwill rules is in the complete GP partnership tax guide.

The cessation of your share for tax

You have a notional trade, and it ceases

For tax, each partner is treated as carrying on their own notional trade, which is simply their share of the partnership trade. HMRC's Partnership Manual is explicit on this. PM163090 explains that a partner's notional trade is treated as having commenced when they first joined the partnership and as having ceased when they leave the partnership (or, if earlier, when the partnership ceases to carry on the actual trade). So when you leave, the cessation (closing-year) rules apply to your notional trade, even though the practice carries on trading without you. Your exit is a cessation for you, not for the practice.

Your final tax year under the post-reform tax-year basis

Since basis period reform, profits are taxed on a tax-year basis, meaning the share allocated to you for the tax year. So your final assessment is broadly your allocated profit share for the part of the final tax year up to your leaving date, plus any earlier untaxed period if your dates were unusual. Remember that you are taxed on your allocated profit share, not on your drawings, so the taxable figure in your final year can differ from the cash you actually took out. The underlying mechanics are set out in our guide to GP partnership basis period reform; we do not re-teach reform here.

Why there is usually no overlap relief left on a later cessation

This is the key technical point, and it is where a lot of older guidance is now out of date. Under the rules before reform, a partner leaving used to deduct their accumulated overlap relief in their final year, which softened the closing-year charge. Basis period reform changed this. In the 2023/24 transition year, every continuing partner deducted all of their overlap relief against the transition part of the year, and no new overlap relief can be created afterwards.

The reasoned consequence is that a partner who leaves in 2024/25 or later will typically have no overlap relief left to set against their final-year profit, because it was already given in 2023/24. So the old planning point that overlap relief cushions your last year no longer applies for most retiring partners. Keep this hedged in your own planning, though, because there are fact-specific exceptions. A partner who joined after the transition, or whose overlap was not fully relieved in 2023/24, may still have a position to consider, so confirm it with your accountant rather than assuming the cushion has gone (or that it remains).

The practical takeaway is that older retirement guidance, and the experience of partners who left under the pre-reform rules, can mislead you here. A colleague who retired a few years ago may genuinely have had a meaningful overlap-relief deduction in their final year, and may tell you to expect the same. For a leaver from 2024/25 onwards that expectation is usually wrong, because the relief was cleared in the 2023/24 transition and no new relief has accrued since. Building your final-year tax reserve on the assumption of an overlap-relief cushion that is no longer there is a common and avoidable mistake. The safer approach is to ask your accountant to confirm, from your own records, whether any overlap relief survives in your specific case, and to reserve for the final-year tax on the basis that, for most partners, it does not.

Transition profit and an early cessation

If you are still spreading your 2023/24 transition profit over the five-year window, ceasing before the spreading ends generally accelerates any untaxed transition profit into the year of cessation rather than letting it continue to spread. That can lift your final-year tax, so it is worth modelling before you commit to a leaving date. The detail sits in our basis period reform guide.

Capital gains tax on a premises share

When CGT can arise

A partnership is transparent for capital gains tax, which means each partner owns a fractional share of the underlying chargeable assets, such as the premises, rather than the partnership owning them as a separate person. So when you leave and give up your entire interest in an asset like the surgery, HMRC treats that as a disposal of your share for CGT (CG27500). Whether a gain actually arises depends on the consideration that passes and on whether the asset has been revalued. On a no-revaluation, no-consideration exit at balance-sheet value, the result can be no gain and no loss. A chargeable gain can arise, though, where the premises has appreciated and consideration passes to you. This is a specialist computation and the numbers are practice-specific, so do not assume a figure.

It is worth understanding why the revaluation point matters so much. Where the premises sits in the accounts at its original cost (or its last-agreed book value) and you simply give up your share for that same book value, there is generally no gain to tax, because you receive what the asset is recorded at. Where, instead, the premises has been revalued to a higher current figure, or where you are bought out at a price above book value, the difference between what you receive and your share of the original cost can be a chargeable gain. Whether your premises has been revalued, and on what basis you are being bought out, are therefore the two questions that decide whether CGT is even in play. Both are facts about your particular practice and your particular exit, which is why no figure can be assumed and why this is one of the points to put in front of your accountant well before you leave.

Statement of Practice D12

HMRC's long-standing practice for partnership capital gains tax is set out in Statement of Practice D12, which governs how a partner's disposal of a fractional interest is computed. Rather than reproduce it, your accountant applies it to your facts; it is the framework behind every partnership CGT computation, including a leaving partner's premises share.

Business Asset Disposal Relief, only on a private disposal

Business Asset Disposal Relief can apply to a partner's disposal of an interest in a trading partnership's chargeable assets, but the relief and its date-banded rate are only the relevant frame where there is an actual chargeable disposal of a private or trading interest. The rate is 10% on disposals to 5 April 2025, 14% from 6 April 2025 to 5 April 2026, and 18% from 6 April 2026, with a £1m lifetime limit and a 2-year qualifying period. The medical-specific point is the one we keep returning to: there is no NHS goodwill disposal to relieve, so the relief is never in point on NHS goodwill, only on a genuine private or trading disposal. The fuller BADR detail is in the complete GP partnership tax guide.

NHS pension on retirement

Retiring from the partnership and drawing your NHS pension are separate decisions on separate timetables, and it helps to treat them that way. The NHS Pension Scheme has its own normal pension ages (60 for the 1995 section, 65 for the 2008 section, and State Pension Age for the 2015 section) and its own partial-retirement and early-retirement routes. Crucially, drawing the pension does not depend on selling anything, because there is nothing to sell. You can plan the timing of the pension claim to suit your wider position, independently of when your capital account is repaid. For the pension mechanics, see GP pension contributions and tax relief, and for planning the exit and pension together, see GP financial planning.

The deed mechanics for an orderly exit

A well-drafted partnership deed does most of the work of making an exit calm rather than contentious. For a leaver, the deed should cover the notice period; how and over what period the capital account is repaid; how the final profit share to the leaving date is calculated and trued up; whether and how a premises share is bought out; release from practice borrowings, leases and capital guarantees; any restrictive covenants; and the handling of tax reserves.

Because you are taxed on your allocated profit share, not your drawings, the final-year true-up matters: the deed should make clear how the closing accounts allocate profit to your leaving date so the figure you are taxed on is the figure the accounts support. An exit handled without a clear deed is where disputes and unexpected tax tend to arise, often months after the leaver has gone. Treat the deed terms as the checklist of items to settle, and take legal advice on the drafting rather than relying on custom and practice.

Two items on that list are easy to overlook and worth singling out. The first is the release from practice borrowings, leases and capital guarantees. A leaving partner who has personally guaranteed a practice loan or jointly signed a lease is not automatically released from that obligation just because they have stopped being a partner; the release usually has to be negotiated with the lender or landlord, and the deed should set out how that is to be pursued. Walking away without a formal release can leave a former partner still exposed to liabilities of a practice they no longer have any say in. The second is the handling of tax reserves: where the partnership has held back amounts to cover partners' tax, the deed should be clear about whether the leaver's reserve follows them out, and on what timetable, so it is neither lost nor double-counted. Both points are about making sure the exit is genuinely final, not just operationally complete.

A practical sequence for a planned retirement

For a planned, orderly exit, a sensible order of work looks like this:

  • Agree the leaving date and serve the notice required by the deed.
  • Confirm your capital account and current account balances from the latest accounts, and the basis on which they will be repaid.
  • Settle the premises share separately if you own one, on its own timetable and valuation.
  • Calculate the final-year profit share to your leaving date and reserve for the tax on it.
  • Check whether any CGT arises on the premises and whether Business Asset Disposal Relief is in point.
  • Confirm whether there is any overlap relief left to rely on (post-reform, usually there is not, but check the exceptions).
  • Coordinate the NHS pension claim separately, on its own timetable.

Each of those steps has a linked page above that goes into the detail, so use this as the map and follow the links for the mechanics.

How we help GPs leaving or retiring from a partnership

We work with GP partners planning an exit and with the partners who remain. In practice that means confirming the capital and current account balances and the repayment basis, calculating the final-year profit share and the right tax reserve, checking whether any CGT or Business Asset Disposal Relief point arises on a premises share, and sense-checking that no overlap relief is being assumed where reform has removed it. We coordinate with your solicitor on the deed terms and with your pension adviser on timing, so the two threads of an exit, the money and the tax, are handled together rather than in isolation. You can read more about how we support partners on our page for GPs, browse related guides in the GP tax and accounts category, or get in touch to talk through a specific exit.