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Free calculator · UK 2026/27

Practice Sale CGT Calculator

Selling a firm, retiring from a partnership, or disposing of your shares in an incorporated practice? Enter the price split and your base cost to see the chargeable gain, how much of it Business Asset Disposal Relief covers at 18%, and what lands in your pocket after Capital Gains Tax.

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Practice Sale CGT Calculator

Selling a firm, retiring from a partnership, or disposing of your shares in an incorporated practice? Enter the price split and your base cost to see the chargeable gain, how much of it Business Asset Disposal Relief covers at 18%, and what lands in your pocket after Capital Gains Tax.

Changes how WIP is taxed. On a share sale the whole price is capital; on a partnership exit, WIP is taxed as income, not capital gain.

£

The goodwill element of the sale agreement (or, for a share sale, the part of the price that reflects goodwill).

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Unbilled work in progress bought by the purchaser.

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Fixtures, equipment and other tangible assets included in the deal.

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Partnership: your capital contribution plus any amount paid for your share of goodwill. Company: what you paid (or subscribed) for the shares.

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Profit share, salary and other income in the tax year of sale. Determines whether any non-BADR gain falls in the 18% or 24% CGT band.

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£1,000,000 lifetime limit, reduced by gains on which you have already claimed BADR (or Entrepreneurs' Relief before 2020).

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£3,000 for 2026/27, less any already used against other gains this tax year.

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How CGT works when you sell a law firm

The starting point is the split of the price in the sale agreement. Goodwill, tangible assets and (in a share sale) work in progress are capital consideration. Your chargeable gain is that capital consideration minus your base cost: for a partner, broadly your capital contribution plus anything you paid for your share of goodwill; for a shareholder, what you paid or subscribed for the shares.

Business Asset Disposal Relief taxes qualifying gains at 18% from 6 April 2026 (it was 14% in 2025/26 and 10% before April 2025), subject to a £1,000,000 lifetime limit. Gains above the remaining limit fall into normal CGT: 18% within your unused basic rate band, 24% above it. Because BADR gains use the basic rate band first, most sellers with partner-level income pay 24% on the excess.

Structure changes the tax on WIP, not the CGT rates. Selling a partnership or LLP interest, the WIP element is an income receipt taxed at income tax rates. Selling company shares, the buyer pays one price for the shares and the whole amount, WIP included, is capital gain. On larger WIP books this difference alone can move the net proceeds by tens of thousands of pounds.

The annual exempt amount (£3,000 in 2026/27) comes off the gain before any tax is charged. The remaining moving parts are eligibility ones: the 2-year ownership and trading conditions for BADR, the 5% shareholding tests on a share sale, and the salaried member rules for LLP members, all of which need checking well before heads of terms are signed.

Worked example: James is a partner at Whitmore Family Law LLP and is retiring after 12 years. The sale agreement allocates £500,000 to goodwill, £80,000 to WIP and £20,000 to tangible assets. His base cost (capital contribution) is £100,000. His other income in the year of sale is £80,000. As a partnership exit, WIP of £80,000 is an income receipt (ITTOIA 2005 ss.182 to 185) and falls outside the CGT calculation. Capital proceeds are £500,000 + £20,000 = £520,000. Gain before AEA: £520,000 minus £100,000 = £420,000. After the £3,000 annual exempt amount, taxable gain = £417,000. BADR applies at 18% (from 6 April 2026) on the full £417,000 within the £1,000,000 lifetime limit, giving CGT of £417,000 x 18% = £75,060. Net capital proceeds after CGT = £520,000 minus £75,060 = £444,940. The £80,000 WIP element is then taxed separately at James's income tax rates.

Worked examples

Example 1: retiring partner sells a partnership interest

A partner retires from a trading LLP. The sale agreement allocates £850,000 to goodwill, £120,000 to WIP and £30,000 to tangible assets. Her base cost (capital contribution plus goodwill previously paid for) is £150,000. Her profit share this year is £85,000 and she has her full £1,000,000 BADR lifetime limit and £3,000 annual exempt amount available.

The capital consideration is £880,000 (goodwill plus tangibles; the £120,000 WIP is an income receipt and stays outside CGT). Chargeable gain: £880,000 minus £150,000 = £730,000. Less the £3,000 annual exempt amount leaves a taxable gain of £727,000, all within the BADR limit, so CGT is £727,000 x 18% = £130,860.

Net capital proceeds after CGT: £880,000 minus £130,860 = £749,140. The £120,000 for WIP is taxed separately as trading income at her income tax rates.

Note: Example figures displayed

Example 2: share sale with part of the BADR limit already used

A sole shareholder sells his incorporated practice for £600,000 (reflecting £480,000 goodwill, £90,000 WIP and £30,000 tangibles). His base cost for the shares is £50,000. He claimed BADR on £600,000 of gains from an earlier disposal, leaving £400,000 of the lifetime limit. His other income this year is £45,000.

Because this is a share sale, the whole £600,000 is capital, WIP included. Chargeable gain: £600,000 minus £50,000 = £550,000; less the £3,000 annual exempt amount = £547,000 taxable. The first £400,000 uses the remaining BADR allowance at 18% (£72,000). The BADR gain also uses up his remaining basic rate band, so the £147,000 balance is all taxed at the 24% higher CGT rate (£35,280).

Total CGT: £72,000 plus £35,280 = £107,280. Net proceeds after CGT: £600,000 minus £107,280 = £492,720.

Note: Example figures displayed

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Planning an exit or succession?

This calculator gives directional figures based on published 2026/27 rates. The real answer depends on BADR eligibility for each seller, the goodwill and WIP allocation in the sale agreement, your partnership or shareholders' agreement, and timing. Our team models the full picture, including income tax on WIP, as part of the exit planning work.

  • SRA Accounts Rules 2019Client account, five-weekly reconciliations under Rule 8.3, and the Rule 12 accountant's report
  • Partnership, LLP and incorporatedProfit shares, the salaried member rules and the tax that follows each structure
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Frequently asked questions

What CGT rate applies when I sell my law firm in 2026/27?
If Business Asset Disposal Relief applies, qualifying gains are taxed at 18% up to your remaining £1,000,000 lifetime limit. Gains above that limit are taxed at the standard CGT rates: 18% to the extent you have unused basic rate band, and 24% above it. Most equity partners have no basic rate band left after their profit share, so the excess is usually taxed at 24%.
Do I still get Business Asset Disposal Relief at 18%?
BADR still exists but the rate has risen: 10% before 6 April 2025, 14% in 2025/26, and 18% from 6 April 2026. The £1,000,000 lifetime limit is unchanged. For a partnership interest you generally need to have been a partner in the trading business for at least 2 years. For company shares you generally need at least 5% of the ordinary shares, votes and economic rights, and to be an officer or employee, for the 2 years to the sale.
How is WIP taxed when a firm is sold?
It depends on what is being sold. On the sale of a partnership or LLP interest, the amount received for unbilled work in progress is an income receipt under ITTOIA 2005 sections 182 to 185, taxed at income tax rates, not as capital gain. On a company share sale, the buyer pays a single price for the shares, so the WIP value inside that price is part of the capital gain and can benefit from BADR.
Is selling a partnership interest taxed differently from selling company shares?
The CGT rates are the same, but three things differ. First, WIP: income on a partnership exit, capital on a share sale. Second, base cost: a partner's base cost is broadly their capital contribution plus any amount paid for goodwill, while a shareholder's is the price paid or subscribed for the shares. Third, the BADR conditions differ: partnership interests need the 2-year partner-in-a-trading-business test, shares need the 5% personal company tests as well.
What if I have already used some of my BADR lifetime limit?
The £1,000,000 limit is a lifetime figure covering every disposal on which you have claimed BADR, and Entrepreneurs' Relief claims before 2020 count against it too. Only the unused balance is available at 18%; the rest of the gain falls into normal CGT at 18% or 24%. Use the advanced option in the calculator to enter your remaining allowance.
Can I reduce the CGT before selling?
The big levers are set before the deal, not after: confirming BADR eligibility for every selling partner or shareholder (including fixing salaried member or sub-5% problems at least 2 years out), the goodwill vs WIP allocation in the sale agreement, timing the completion date against your income and other gains, and spousal transfers to use two annual exempt amounts and two BADR limits. All of these need doing well before exchange, which is why exit planning should start 2 or more years ahead.