Selling a Practice or Buying Into a Partnership Before the Budget? What Could Happen to Business Asset Disposal Relief

What are the Business Asset Disposal Relief rules today?

Business Asset Disposal Relief, once called Entrepreneurs’ Relief, lowers the Capital Gains Tax paid when you sell all or part of a qualifying business. GOV.UK sets the rate at 18% on qualifying gains for disposals from 6 April 2026, up from 14% between 6 April 2025 and 5 April 2026 and 10% before that (GOV.UK, Business Asset Disposal Relief). Gains outside the relief are taxed at the main rates of 18% or 24%.

• Lifetime limit. HMRC’s helpsheet HS275 sets a lifetime limit of £1 million of qualifying gains for each person, for disposals on or after 11 March 2020.
• Partners and sole practitioners. You must have owned the business, alone or as a member of the partnership, for at least two years up to the date of sale. Selling part of your share in a partnership can also qualify, and HS275 sets out the conditions.
• Incorporated practices. For shares, the company must have been your personal company for at least two years, usually meaning at least 5% of the shares and voting rights along with other conditions, and you must have been an employee or office holder throughout.
• Closing down. If the practice stops trading, the assets generally need to be sold within three years to qualify.
• Deadline. The claim must be made by the first anniversary of the 31 January after the tax year of the sale. For a sale in 2025 to 2026, that is 31 January 2028.

One rule catches practices that incorporate. If you sell your business to a close company in which you and connected people own 5% or more of the ordinary shares, the gain on goodwill does not qualify for the relief, although gains on other assets may still qualify (HMRC helpsheet HS275). Our earlier post on the Autumn Budget 2026 covers the wider tax picture for practices.

What is being reported about the Budget, and how reliable is it?

None of the following has been announced. It is reporting and commentary in the weeks before the Budget, with the source for each.

• Capital Gains Tax rates. Reuters, citing The Times, reported on 19 October 2026 that the Chancellor had ruled out a rise in Capital Gains Tax in his first Budget. The Treasury declined to comment, saying that decisions on tax are a matter for the Chancellor to set out at fiscal events. The same report said the Financial Times had reported the week before that he had ruled out matching Capital Gains Tax to income tax rates, though a smaller rise was reportedly still being considered.
• The relief itself. Daily Business suggested on 25 October 2026 that the price of no rise in Capital Gains Tax may be no help with Business Asset Disposal Relief, or even its removal. That is the publication’s own view, not a leak or an announcement.
• Calls to protect it. City AM reported on 25 October 2026 that entrepreneurs are urging the Chancellor to protect the relief, and that a group of founders has called for tax breaks for people who reinvest the proceeds of a business sale into other British companies.
• A possible improvement. Law firm Osborne Clarke suggested on 6 October 2026 that any change to Capital Gains Tax could be paired with an improved form of investors’ relief or Business Asset Disposal Relief.

In short, the reporting points both ways, and none of it tells you what the Chancellor will say. The only reliable position is the one on GOV.UK today.

Can you sell before Budget day to lock in today’s rate?

Rarely, and it is risky to try. A practice sale needs heads of terms, due diligence, the buyer’s funding approved, legal documents and, in many professions, consent from a regulator, NHS commissioner or landlord. Those steps do not fit into two days.

Timing rules matter too. When the main Capital Gains Tax rates rose in the Autumn Budget 2024, the new rates applied to disposals made on or after Budget day, 30 October 2024. HMRC also set rules for unconditional contracts made before that date but completed after it, taxing them at the new rates unless the parties could show the contract was not made to gain a tax advantage (GOV.UK, Capital Gains Tax rates of tax). Nobody knows whether any change this year would work the same way, but it shows why rushing a deal for tax reasons alone is a poor bet.

If a sale is already well advanced, ask your accountant or tax adviser how the timing of exchange and completion affects your position. If it is not, it is usually better to keep the deal on its normal timetable and understand the new rules first. Our guide to funding partner retirement and succession and our succession and exit page cover how sales are normally planned.

Buying into a partnership? What the Budget could mean for you

The relief is the seller’s tax, but a change can still reach the buyer. A retiring partner who expects a higher bill may want to bring their exit forward, push for a higher price or ask for more of it on day one rather than over time. A partner who is less worried may be happy to wait. Either way, the incoming partner or buyer needs to know what they can borrow, and on what terms, before the talks move quickly.

For an incoming partner, the usual cost is a capital contribution to the firm, sometimes with a payment for a share of goodwill. That is normally funded with a personal loan for partner capital, repaid from your profit share. Our guide to partner capital loans explains how lenders look at them, and partner buy-in finance sets out the options. Ask your accountant whether the interest on your loan qualifies for tax relief, because that depends on how the loan and the partnership are set up.

For an outright purchase, practice acquisition finance and goodwill finance usually fund the price, sometimes alongside a deferred payment agreed with the seller. Our guide to buying a professional practice lists every cost to fund, and profession guides on selling a dental practice and selling an accountancy practice show the seller’s side.

What does practice purchase and buy-in finance cost?

Rates depend on the lender, the practice’s accounts, the amount and the term. Lenders on our panel publish practice purchase, goodwill and partner buy-in loans at 10.25% to 25% a year, or 10.25% to 16.53% over 5 years. These are indicative published ranges from October 2026 and your rate depends on your circumstances.

Lenders usually look at two or three years of accounts, the agreed price and how it was reached, the partnership or shareholders’ agreement, how much of the income depends on the person leaving, and whether the buyer can carry the repayments alongside their drawings. Our guide to preparing a practice finance application lists what is normally asked for.

The partner buy-in loan calculator and the practice purchase loan calculator show what different amounts and terms cost each month, and what it costs to buy a professional practice sets out the full ranges.

What should sellers and buyers do before and after 28 October?

• Sellers, check with your accountant that you meet the two-year conditions today and how much of your £1 million lifetime limit is left.
• Model the sale on today’s rules, then on one or two possible changes, so a Budget announcement does not force a rushed decision.
• Buyers and incoming partners, find out what lenders would support now, so you can agree a timetable with confidence whatever is announced.
• After the Budget, read the measures on GOV.UK rather than the headlines, and check the start date of anything that affects you. We will update this post once the Budget documents are published.

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Common questions

Published 26 October 2026. Figures and dates are taken from the sources named and were correct on that date. This article is for general information only and should not be treated as legal, tax, accounting or financial advice. Funding availability and lender requirements depend on individual circumstances.