Business Asset Disposal Relief was 10% until 5 April 2025, 14% for the year after, and 18% from 6 April 2026. The relief still exists and the conditions still take two years to satisfy, but the reason for arranging a practice sale around it has largely gone.
Article · 6 July 2026
For years the standard advice on selling a practice included getting the Business Asset Disposal Relief conditions satisfied and then timing the disposal around them. The relief is still there. The rate is not what it was.
Disposals on or before 5 April 2025 were taxed at 10%. From 6 April 2025 the rate became 14%. From 6 April 2026 it is 18%. Against a main higher rate of capital gains tax of 24%, that is a gap of six percentage points — which changes the shape of a sale decision quite a lot.
| Date of disposal | BADR rate | Gap to the 24% higher rate |
|---|---|---|
| On or before 5 April 2025 | 10% | 14 points |
| 6 April 2025 to 5 April 2026 | 14% | 10 points |
| From 6 April 2026 | 18% | 6 points |
The direction is what matters. In two steps the relief has gone from cutting the tax on a qualifying gain by well over half to shaving six points off it.
Take a share disposal producing a gain of £500,000, all of it qualifying, and ignore any annual exempt amount so the rates are visible. Illustrative figures.
The same gain therefore costs £40,000 more in tax than it would have on a disposal before 6 April 2025, and the relief itself is now worth £30,000 rather than £70,000.
The practical consequence is a change of priority rather than of answer. £30,000 is real money and worth having. It is no longer enough to justify deferring a sale by a year, accepting a weaker buyer, taking a worse deal structure, or holding a practice through a period of falling margins to get a qualifying period over the line. When the relief was worth £70,000 on the same gain, all of those trade-offs looked different. Price, structure and certainty of completion now dominate the tax rate.
Every route into BADR requires at least two years before the disposal, and that is the part people run out of rather than the rate.
The 5% test is the one that catches veterinary structures, because they are often built without it in mind. A junior partner brought in on a 4% shareholding to keep the arithmetic tidy does not qualify. Nor does a spouse holding non-voting shares. Nor, on the second limb, does a shareholder whose 6% of shares carries no entitlement to 5% of proceeds because of a waterfall in the articles. The trading requirement is a separate trap where a practice company has accumulated cash or holds the surgery premises as an investment rather than for the trade.
BADR is subject to a lifetime limit on qualifying gains. We have deliberately not printed a figure for it, because the widely repeated number is not stated on the gov.uk page this article is built from, and a lifetime cap is precisely the kind of number that should be confirmed against the legislation rather than repeated from memory. If a limit is going to be load-bearing in your decision, it needs confirming against the current Finance Act or the Capital Gains manual first.
Now look at the same transaction from the other side, because it explains a lot about how veterinary deals get structured and priced.
Corporation tax relief on purchased goodwill and other relevant assets acquired on or after 1 April 2019 is a fixed 6.5% a year. But it is available only where the acquisition includes qualifying intellectual property, and it is then restricted to the lower of the asset cost or six times the cost of the qualifying IP. There is no relief at all where there is no qualifying IP, where there is no accompanying business acquisition, or where the asset is acquired from a related party having been internally generated.
A typical independent small-animal practice's value sits in goodwill and client relationships, with little or no registered intellectual property. Illustratively:
So the buyer's after-tax cost of goodwill is close to its gross cost. That is a verifiable, structural reason why buyers push on price, why the asset-versus-share question is argued about, and why an allocation of consideration that looks cosmetic to a seller is worth arguing over to a buyer. It also means a seller should expect a corporate buyer's model to look less generous than the headline figure implies, for reasons that have nothing to do with the practice.
You will not find a valuation multiple anywhere on this site. No primary source publishes one for UK veterinary practices — the CMA's final report, which had access to the groups' actual financial data, deliberately does not. What its Appendix C does publish is a profitability picture: in a sample of 36 small independent veterinary firms, EBIT margins over 2021 to 2023 ranged from -9% to +34% with a weighted average of 11%, a top sextile at 28% and a bottom sextile at 0%. Any multiple you have been quoted comes from broker or trade material, not from a source that can be checked.
Merger notification in the UK is voluntary, and the CMA's market investigation created no new filing duty. But paragraph 136 of the final report of 24 March 2026 records that previous CMA merger investigations in the veterinary sector have led to divestments of first opinion practices, and that the CMA will continue actively monitoring merger activity in the sector, applying the analysis from this investigation. A footnote adds that it may assess future mergers using share of full-time-equivalent vets in specific local areas, as it has before.
For a seller in a town where one group already holds most of the first opinion capacity, that is call-in risk on completion certainty rather than a filing obligation. It belongs in the timetable conversation, not the tax one.
Check the conditions early, because they take two years and no amount of planning at the point of sale can shorten that. Get the 5% test right when shares are issued rather than when they are sold. Keep the company's activities demonstrably trading. Then let price, deal structure and certainty of completion drive the timing, because a six-point rate advantage is no longer big enough to lead the decision.
What a buyer actually prices is in the guide to selling a practice, with the diligence side in the guide to buying one. The value drivers, deliberately returning no multiple, are in what drives a practice's value. The service pages are selling a veterinary practice and buying a veterinary practice, and if the buyer is one of the six groups, selling to a corporate group is the relevant page. This is general information, not tax advice on a specific disposal.
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18% for disposals from 6 April 2026. The rate was 10% for disposals on or before 5 April 2025, 14% for disposals between 6 April 2025 and 5 April 2026, and 18% from 6 April 2026. Against the main higher rate of capital gains tax of 24% that leaves a gap of six percentage points. On an illustrative qualifying gain of £500,000, ignoring any annual exempt amount, the tax is £90,000 at 18% against £120,000 with no relief, so the relief is worth £30,000. The same gain would have carried £50,000 of tax on a disposal before 6 April 2025.
Much less than it was, and rarely enough to lead the decision. When the relief was worth £70,000 on an illustrative £500,000 gain, deferring a sale to satisfy the two-year conditions, or accepting a weaker structure to keep the relief, could be justified on the tax alone. At 18% the relief is worth £30,000 on the same gain — real money, but not enough to outweigh a better price, a stronger buyer or a more certain completion. What is still worth planning years ahead is the conditions themselves, because each route requires at least two years before the disposal.
It is the shareholder route's ownership condition, and it has two limbs. For shares that are not from an Enterprise Management Incentives scheme you need at least 5% of the shares and 5% of the voting rights, and in addition an entitlement to at least 5% of either the profits and assets available on a winding up or the disposal proceeds. Both limbs must hold for at least two years before disposal, and you must also be an employee or office holder of a company whose main activities are trading. A junior partner on 4%, a holder of non-voting shares, or a shareholder whose proceeds entitlement is cut by a waterfall in the articles will fail it.
Because it may get no tax relief on it. Corporation tax relief on goodwill and relevant assets acquired on or after 1 April 2019 is a fixed 6.5% a year, available only where the acquisition includes qualifying intellectual property, and restricted to the lower of the asset cost or six times the cost of that qualifying IP. Most independent practices have little or no registered IP, so a buyer paying £600,000 of goodwill often gets nil relief. With £20,000 of qualifying IP the relief would be capped at £120,000, giving £7,800 a year of deduction. That gap drives price and structure negotiations.
There is no mandatory pre-notification obligation in the UK: merger notification is voluntary and the market investigation created no new filing duty. The thresholds that make a merger reviewable are UK target turnover exceeding £100 million, or the creation or enhancement of a 25% share of supply in the UK or a substantial part of it with a £10 million turnover floor, plus a separate acquirer threshold at a 33% share of supply and £350 million of UK turnover. The final report states the CMA will keep monitoring veterinary merger activity and may look at share of full-time-equivalent vets locally, so concentrated areas carry call-in risk.
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