Selling a Private Medical Practice: CGT and Business Asset Disposal Relief at 18%

Where a doctor runs a genuinely private business and comes to sell it, that is real saleable value, and the capital gains tax rules apply in full. This is the opposite of the NHS practice, where goodwill cannot be sold at all. This page walks through the capital gains tax computation on a private-practice disposal, how Business Asset Disposal Relief (BADR) cuts the rate, the conditions and limits you have to meet, and how the contract date fixes the date of disposal and so the rate that applies. NHS goodwill is out of scope throughout, and we link to the page that explains why.

First, what can actually be sold (and what cannot)

Before any CGT computation, draw the line clearly. NHS GP goodwill cannot be sold; its sale has been prohibited since 1 April 2004, currently under SI 2019/251. So this page is not about an NHS practice. It is about genuinely private medical businesses, and if you are asking about the NHS side you should start with our guide to whether GP practice goodwill can be sold under the NHS rules.

The businesses we are concerned with here are ones with real, transferable value. Typical examples include a self-pay or cosmetic clinic, an aesthetics company, a private consultant limited company, an occupational-health business, or a medico-legal book of work run as a distinct business. Where that activity is a genuine standalone business, its goodwill and assets are chargeable assets and the ordinary CGT rules apply on a sale.

There are two disposal shapes to keep in mind throughout. You can sell the assets and goodwill of an unincorporated private practice (an asset sale), or you can sell the shares in a private company (a share sale). The capital gains tax and BADR conditions differ slightly between the two, so we cover both.

How capital gains tax works on the sale

The core mechanic is simple to state. Capital gains tax is charged on the gain, not on the whole price you receive. The gain is broadly the proceeds, less the base cost (what you paid for or invested in the asset), less the allowable costs of acquisition and disposal such as professional fees.

The annual exempt amount is set against the gain first. It is modest now, having been reduced over recent years, and for 2026/27 it is £3,000. Against a substantial practice gain it makes little difference, but it is the first deduction in the computation.

Without any relief, a gain of this kind would be taxed at the standard CGT rates for the year. Business Asset Disposal Relief, where it applies, replaces that with a single reduced rate on the qualifying gain, and the saving can be significant. The contrast between the standard rate and the BADR rate is the whole reason the relief is worth pursuing.

One structural point matters from the outset. On an asset sale, the individual disposes of the goodwill and the chargeable assets directly. On a share sale, the individual disposes of the shares. Where a company sells its own assets, the company has no access to BADR at all, because BADR is a personal relief on an individual's disposal. That distinction shapes how a deal should be structured well before completion.

Business Asset Disposal Relief: the headline rate cut

Business Asset Disposal Relief charges qualifying gains at a reduced CGT rate instead of the main rate. It is the single most valuable relief on a private-practice sale, and three features define it: the rate, the lifetime limit, and the qualifying period.

The rate, and what it is worth

The BADR rate on a disposal made now is 18%, the rate that applies to all gains on qualifying assets disposed of from 6 April 2026. Two earlier bands still exist, and they matter only for working out the rate on a disposal that has already happened or is still to be reported: 14% on disposals between 6 April 2025 and 5 April 2026, and 10% on disposals on or before 5 April 2025. If your disposal is still ahead of you, 18% is your rate.

What the relief saves is the gap between 18% and the main CGT rate that would otherwise apply. For a higher-rate taxpayer, the main rate on assets other than residential property is 24%, so BADR is worth 6 percentage points on the qualifying gain. On a £1 million qualifying gain that is £180,000 instead of £240,000, a saving of £60,000. It is worth having and worth claiming properly, but it is a far smaller edge than the old 10% rate gave, and that is worth knowing before a deal is bent to secure it.

The £1 million lifetime limit

BADR is capped at £1,000,000 of qualifying gains per individual over their lifetime, under TCGA 1992 section 169N. This is a lifetime allowance, not a per-disposal one, so any prior qualifying disposals you have already made use up part of it. Gains above the limit do not get the BADR rate; they fall to the normal CGT rate for the year. If you have claimed the relief before, you need to know how much of the £1 million is left before relying on it.

The two-year qualifying period

The qualifying conditions must be met throughout the two years ending on the date of disposal. For an unincorporated business that means you must have owned it for at least two years; for a share sale it means the shareholding and role conditions must have been satisfied for at least two years to the disposal date. A business or shareholding that is too new does not qualify, which is why the clock is worth checking early.

Do you actually qualify? The conditions

Qualification turns on whether you are disposing of a business or of shares, and the tests differ.

For an unincorporated private practice

This is a business or asset disposal. It must be a disposal of all or part of a trading business that you have owned for at least two years, or a disposal of assets that were used in the business at the time it ceased (subject to the associated time limits for a post-cessation disposal). Investment activity does not qualify; the relief is for trading businesses. So a genuine private clinic or medico-legal practice run as a trade can qualify, while passive investment holdings cannot.

For a share sale of a private company

For at least two years to the date of disposal, you must satisfy a set of conditions together. You must hold at least 5% of the ordinary share capital and 5% of the voting rights. You must be entitled to at least 5% of the economic interest, meaning the profits available for distribution and the assets available to you on a winding up. You must be an officer or employee of the company, or of a company in the same group. And the company must be a trading company, or the holding company of a trading group. All of these run together across the two-year period; failing any one of them at any point in that period can lose the relief.

The trading requirement and medical companies

A consultant's private company is normally a trading company, so the trading test is usually met in substance. The point to watch is that a company holding large cash reserves or significant investments can jeopardise its trading status, because substantial non-trading activity can tip it over the line. This is a reason to review the company's balance sheet ahead of a sale rather than a cause for alarm; most active private practices are comfortably trading, but it is worth confirming.

Walking through the share-sale conditions in practice

The five conditions for a share sale are easy to list and easy to trip over, so it helps to see how each behaves across the two-year window, not just at the moment of sale.

• The 5% ordinary share capital test. At least 5% of the ordinary shares must be held throughout the two years. A share reorganisation, a new class of shares issued to a family member, or an investor coming in can dilute the holding below 5% and reset the clock; a holding that only crossed 5% eighteen months before the sale does not yet meet the two-year test.
• The 5% voting rights test. Voting rights are tested separately from share capital, so a structure that gives someone the economic shares but parks the votes elsewhere can satisfy one limb and fail the other. Both must be held together for the whole period.
• The 5% economic-interest test. The holder must be entitled to at least 5% of the profits available for distribution and at least 5% of the assets on a winding up. Alphabet-share arrangements that steer dividends disproportionately to one shareholder can undercut this limb even where the bare percentage of shares is above 5%.
• The officer-or-employee test. The seller must be a director (an officer) or an employee of the company, or of a group company, throughout the two years. Someone who steps back more than two years before the sale, or who was never formally appointed, can fail this even though they own the shares.
• The trading-company test. The company must be a trading company, or the holding company of a trading group, for the whole period, the balance-sheet point covered above. Several of these are fixable if caught early and impossible to fix once the two-year clock has run out, which is why they are worth checking a year out rather than a week before exchange.

The contract date decides everything: TCGA 1992 section 28

The single most misunderstood mechanic in a practice sale is the date of disposal. It is not the day the money lands, and it is not the day the buyer takes over. It is the contract date, and it decides which tax year the gain falls in, which return it goes on, when the tax is due, and which BADR rate band applies to it.

When is the disposal treated as made?

Under TCGA 1992 section 28(1), where an asset is disposed of under an unconditional contract, the disposal is treated as made when the contract is entered into, not when the asset is conveyed or transferred. Exchange, in other words, not completion. A practice sold under an unconditional contract exchanged in March, completing in July, is a disposal in the tax year of the March exchange, and it belongs on that year's return.

Conditional contracts

Under section 28(2), where the contract is conditional, including conditional on a third party's consent or on an option being exercised, the disposal is treated as made when the condition is satisfied. Whether a contract is conditional or unconditional is a question of its actual terms, not of what the parties call it, and a sale hanging on a landlord's consent to assign a lease or on a regulatory approval is the common medical example. A conditional contract can land the disposal in a later tax year than the signature date suggests, and that is the trap: the seller books the gain in the year they signed, and the condition is not met until after 5 April.

Where the rule bites in practice

Three situations show the live use of section 28. The dates are illustrative.

• An unconditional contract exchanged before 6 April 2026, completing later. Say a clinic was sold under a binding unconditional contract exchanged on 2 April 2026, with completion on 30 June 2026. Section 28(1) dates the disposal on 2 April 2026. That makes it a 2025/26 disposal taxed at the 14% BADR rate, reported on the 2025/26 return, even though the proceeds arrived in the following tax year. Completion in June does not move it.
• A conditional contract signed in one year and satisfied in the next. If the same sale had been conditional on a landlord's consent to assign that only arrived on 20 April 2026, section 28(2) dates the disposal on 20 April. That is a 2026/27 disposal at 18%, on a different return, with the tax due a year later. Same signature date, different year, different rate.
• A sale being negotiated now. A disposal contracted from 6 April 2026 is taxed at 18% whether it is exchanged today or next spring, so the rate is no longer a reason to hurry. What section 28 still decides is which tax year the gain falls into, which is a real question where a seller has other gains, other BADR claims against the £1 million lifetime limit, or a reason to want the liability in one year rather than the next. Where a genuine commercial condition exists, it can shift the year; a condition inserted for no purpose other than to move the date is not the same thing.

Do not let the tail wag the dog

The rate itself is now settled at 18% for any disposal ahead of you, so there is no date to race and nothing to be gained from rushing a contract. What is worth doing is making sure the contract you sign is the contract you think you are signing, so the disposal is dated in the year you expect and the gain is reported in the right one. An artificially contrived contract carries its own risks, commercial and otherwise, and buys nothing on the rate.

A worked illustration

The figures below are illustrative only and are used to show the mechanics, not to represent any real client or transaction.

Imagine a single owner sells a private clinic and, after deducting base cost and allowable costs, arrives at a chargeable gain that sits within the £1 million BADR lifetime limit. Suppose the gain is £800,000 and the disposal is dated now. BADR applies at 18%, giving a tax cost of £144,000. Without the relief, the same gain taxed at the 24% main rate for a higher-rate taxpayer would cost £192,000, so qualifying for BADR is worth £48,000 on this illustrative gain.

Now suppose the same value is realised instead as a share sale of the owner's private company, and the owner has held at least 5% of the shares and voting rights, has been an officer or employee, and the company has been trading throughout the two years to disposal. The qualifying gain is taxed at the same 18% rate, so the arithmetic is identical; what differs is the route to qualification and the consequences for the buyer. The point of the illustration is that qualification, the lifetime limit and the date of disposal drive the outcome, not the headline label on the deal.

A step-by-step CGT computation

It helps to see the computation in order, because the annual exempt amount, the lifetime limit and the rate enter at different points. The numbers are illustrative only. Take an individual disposing of the goodwill and assets of a private clinic, with the disposal dated now, so at the 18% BADR rate.

• Start with the proceeds. Say the price attributable to chargeable assets and goodwill is £620,000.
• Deduct the base cost. Broadly what was paid for or invested in the asset; for goodwill built up from scratch this may be small or nil. Suppose it is £20,000 across the assets.
• Deduct allowable costs. Legal and accountancy costs of the sale are allowable; say £15,000. The gain so far is £620,000 less £20,000 less £15,000, which is £585,000.
• Deduct the annual exempt amount. For 2026/27 it is £3,000, so the gain becomes £582,000.
• Apply the lifetime limit. The remaining £582,000 sits within the £1,000,000 BADR lifetime limit, assuming no prior qualifying disposals have used it up, so the whole gain qualifies for the BADR rate. If earlier disposals had already used £700,000, only £300,000 would get the BADR rate and the balance would fall to the normal CGT rate.
• Apply the rate. £582,000 at the 18% BADR rate is a tax cost of £104,760. The same gain at the 24% main rate, if the relief were not available, would be £139,680, so the relief is worth £34,920 here.

The order matters, and where a gain exceeds the £1m limit, splitting it across the BADR rate (up to the limit) and the standard CGT rate (above it) is part of the same computation.

Asset sale or share sale, and the company double-tax point

The choice between an asset sale and a share sale is not only about which set of BADR conditions you meet. It changes who is taxed, and how many times, which is the single most important structural point where a private practice is run through a company. On an asset sale of an unincorporated practice the individual disposes of the goodwill and chargeable assets directly, and on a share sale the individual disposes of the shares; in both cases there is a single layer of tax, the individual's own CGT on their gain, reduced by BADR where the conditions are met.

The route to avoid, where the goal is to extract value for the owner, is the company selling its own assets and goodwill. Here the tax stacks up twice. First the company pays corporation tax on its own chargeable gain on the sale, because a company has no access to BADR (BADR is a personal relief on an individual's disposal, not a company's). Then, when the owner wants the after-tax proceeds out of the company, extracting that cash as a dividend or on a later winding up is itself a taxable event. So the same value can be taxed once in the company and again on extraction, with no BADR on the company layer at all. That is the company double-tax point, and it is why, for an owner realising value, a share sale (one personal CGT layer, BADR available) is usually preferable to having the company sell its trade and then distribute the cash.

None of this makes one route automatically right. A buyer may insist on an asset purchase to leave unwanted liabilities behind, and the conditions, warranties and price each route attracts differ. The point is that the number of tax layers, and whether BADR reaches the gain at all, depends on the shape of the deal, so the comparison has to be run on your actual structure before heads of terms.

What is not in scope (and where it goes instead)

A few related points belong on other pages, and it is worth signposting them so the boundaries of this guide are clear.

• NHS GP goodwill. It cannot be sold, so no CGT or BADR question arises. See our guide to the NHS goodwill rules.
• Deferring instead of selling. If you are incorporating rather than selling out, section 162 incorporation relief defers the gain by rolling it into the shares. We cover that in full in our guide to section 162 incorporation relief for a private medical practice.
• The income-tax treatment of private income while you run the business. That is a separate question from the one-off capital event of a sale; see our guide to NHS and private income tax, and our overviews of the benefits and drawbacks of a medical limited company and corporation tax on the company before sale.

On the pension side, it is worth the one-line reminder for consultants weighing the private route: private income, and any company dividends, is not NHS-pensionable. A sale is a capital event and does not change that, but it underlines that building value in a private business and eventually selling it is a different financial path from accruing NHS pension on pensionable pay.

Practical steps before you sell

If a sale is on the horizon, a handful of checks make a real difference to the outcome.

• Check the two-year clock and the 5% and officer-or-employee tests early, so you are not caught short on qualification.
• Confirm the company's trading status, and review the balance sheet for any cash or investment build-up that could put it in doubt.
• Keep clear records of base cost and any improvement or capital spend, because these reduce the gain.
• Take advice on contract structure (conditional versus unconditional) before exchange, so the disposal is dated in the tax year you intend and reported on the right return.
• Work out how much of the £1 million lifetime BADR limit you have already used on earlier disposals.

How we help doctors selling a private practice

We advise doctors selling genuinely private practices and private companies: computing the gain, confirming whether the BADR conditions are met, checking the two-year clock and the share and role tests, and reviewing trading status before a sale. We work through the contract-timing position with you, so the disposal is dated in the tax year you expect and the gain lands on the right return. We also keep the NHS boundary clean, so nobody assumes a relief that cannot apply to an NHS list. You can read more about how we support consultants and GPs, or get in touch through our contact page, and browse our wider private practice guides.