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 why the BADR rate stepping from 14% to 18% on 6 April 2026 turns disposal timing into a planning decision. 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 2025/26 it is £3,000. Because that figure changes, confirm the current year's amount on gov.uk rather than relying on an old number. 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 bands

The BADR rate is stated with its dates every time, because it is rising. It was 10% on disposals to 5 April 2025. It is 14% on disposals from 6 April 2025 to 5 April 2026. It is 18% on disposals from 6 April 2026. Each step makes the relief less generous, which is the planning point we return to below.

The £1 million lifetime limit

BADR is capped at £1,000,000 of qualifying gains per individual over their lifetime. 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 6 April 2026 rate step as a timing lever

Because the rate moves from 14% to 18% on 6 April 2026, timing has become a genuine planning decision. On a £1 million qualifying gain, the BADR cost rises from £140,000 at 14% to £180,000 at 18%, a difference of £40,000 turning purely on which side of the date the disposal falls. Those figures are illustrative, but the arithmetic is real, and on a large gain the amount at stake is meaningful.

When is the disposal treated as made?

The reason timing can be managed at all is that CGT timing follows the contract, not completion. Under TCGA 1992 section 28(1), an unconditional contract is treated as made (and so is the date of disposal) when the contract is entered into, not when the asset is conveyed or the money changes hands. So a binding unconditional contract signed on or before 5 April 2026 falls in the 14% band even if completion happens weeks or months later.

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 date is when the condition is satisfied. So a contract that is conditional on a consent only obtained after 5 April 2026 is dated in the 18% band, even though it was signed earlier. The conditional versus unconditional distinction is the technical heart of the timing point, and whether a contract is one or the other is a question of its actual terms, not of what the parties call it.

A timing walk-through across the 6 April 2026 step

Three short scenarios show how section 28 decides which rate band a disposal lands in. The dates are illustrative.

  • Unconditional contract exchanged 2 April 2026, completion 30 June 2026. The contract is binding and unconditional on exchange, so under section 28(1) the disposal date is 2 April 2026 and the gain falls in the 14% band, even though the money and the keys change hands in June. Completion after 5 April does not move the disposal date.
  • Conditional contract exchanged 2 April 2026, condition met 20 April 2026. If the sale is conditional on a landlord's consent to assign a lease that only arrives on 20 April 2026, section 28(2) dates the disposal on 20 April, after the step, so the gain falls in the 18% band. The earlier signature does not help, because the contract was not yet binding in the relevant sense.
  • Unconditional contract exchanged 5 April 2026. An unconditional exchange on the last day of the 14% band fixes the disposal on 5 April and keeps the gain at 14%. Exchange a day later, on 6 April 2026, and the same gain is taxed at 18%. What matters is the character of the contract on the date of exchange, not the completion date.

Do not let the tail wag the dog

Timing a sale to beat the rate step only makes sense if the deal is genuinely ready to complete. An artificially rushed or contrived contract carries its own risks, both commercial and in terms of how it is later viewed. The right way to treat the 6 April 2026 step is as a planning point to raise early with your adviser, so that a deal which is happening anyway is structured on the better side of the date, rather than as a trick to force a sale that is not ready.

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. If the disposal is dated on or before 5 April 2026, BADR applies at 14%, giving a tax cost of £112,000. If the same disposal is dated from 6 April 2026, BADR applies at 18%, giving £144,000. The timing alone accounts for £32,000 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 BADR rate band, so the rate-step arithmetic is identical; what differs is the route to qualification and the consequences for the buyer. The point of the illustration is that the rate band, the date of disposal and the qualifying conditions 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 band enter at different points. The numbers are illustrative only. Take an individual disposing of the goodwill and assets of a private clinic, with a disposal dated in the 14% band (on or before 5 April 2026).

  • 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 2025/26 it is £3,000, so the gain becomes £582,000. Confirm the current year's figure on gov.uk, as it has been reduced over recent years.
  • 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 14% is a tax cost of £81,480. Dated from 6 April 2026 instead, the same gain at 18% would be £104,760, a difference of £23,280 driven only by the rate step.

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.

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) with the 6 April 2026 step in mind, so the disposal date falls where you intend.
  • 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. Where the 6 April 2026 rate step is in play, we work through the contract-timing position with you so a deal that is happening anyway lands on the right side of the date. 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.