Home / Partners and buy-ins

Buying into a practice

The clinical case for a buy-in is usually obvious long before the financial one is. This page is the financial one: what you are paying for, what the money looks like afterwards, and the tax on the way in and the way out.

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Corporation tax 2026/27: 19% / 25%An effective 26.5% on profits between £50,000 and £250,000
Dividends from 6 April 2026: 10.75% / 35.75%Both up two points; additional rate 39.35%, allowance £500
BADR from 6 April 2026: 18%Up from 14%, and from 10% before April 2025
Marginal cost of a profit share: 42%Above £50,270, and 47% above £125,140

Goodwill, and why the tax system barely recognises it

Strip an independent first opinion practice down and the balance sheet is modest: fit-out, equipment, some stock, maybe the freehold if you are lucky. The value is in goodwill and client relationships. That is unremarkable until you look at how a buyer gets tax relief on it, at which point it becomes one of the most consequential facts in the whole transaction.

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 only where the acquisition includes qualifying intellectual property, and then only up to the lower of the asset cost or six times the cost of the qualifying IP. Where there is no qualifying IP, there is no relief. There is also no relief where the goodwill is acquired without an accompanying business, or from a related party who generated it internally.

An illustrative example. A company pays £600,000 for the goodwill of a practice with no registered intellectual property. Relief: nil. Add £20,000 of qualifying IP to the same acquisition and the relievable amount is capped at six times that, so £120,000, giving £7,800 of relief a year at 6.5%. On a £600,000 payment, that is relief on a fifth of it. Both figures are illustrative, and the point is the shape rather than the amount: a buyer of a typical practice is usually paying for something the tax system will not let it write down.

The buyer often gets no corporation tax relief at all on the goodwill it pays for. That is not a loophole to work around — it is a real driver of price and of whether a deal is structured as shares or as assets.

Which is why "should we do this as a share purchase or an asset purchase" is a question with a money answer rather than a preference answer, and why it should be settled before heads of terms rather than after. Our buying a practice page goes through the due diligence, and the value drivers tool scores what a buyer actually prices — deliberately without producing a multiple, because no primary source publishes one.

The trap nobody mentions

How many companies are dividing your tax bands?

Corporation tax for the financial year beginning 1 April 2026 is 19% on profits up to £50,000 and 25% on profits over £250,000, with marginal relief in between at a standard fraction of 3/200 — an effective 26.5% on the slice between the two limits. That structure has applied since 1 April 2023 and has not moved.

What moves is the limits. They are divided by one plus the number of associated companies, and proportionately reduced for a short accounting period. In veterinary practice this bites constantly, because the natural structure is more than one company: the trading practice, a property company holding the premises, and often a service company used for locum or referral work.

An illustrative example. A practice company makes £60,000 of taxable profit. Standing alone, corporation tax is 25% of £60,000 less marginal relief of 3/200 of the £190,000 by which profit falls short of the upper limit — £15,000 less £2,850, so £12,150, an effective 20.25%. Now put a property company and a service company alongside it. The divisor becomes three, the limits become £16,667 and £83,333, and the same £60,000 of profit carries £15,000 less £350, so £14,650 — an effective 24.4%. That is £2,500 more tax on profit that has not changed by a penny. Illustrative figures, and the arithmetic is the standard marginal relief computation.

Not only about shares

Association is not decided by shareholdings alone. HMRC's guidance treats companies as associated where there is substantial commercial interdependence — financial, economic and organisational links. A property company that exists only to hold the practice premises, and a service company that invoices only the practice, are exactly the fact pattern that argument is built for.

This is the single most common thing a buy-in gets wrong, because the new partner models the practice company in isolation and the group is what gets taxed. The incorporation calculator carries the divisor, which most published comparisons do not.

The money afterwards

2026/27 rates, and the change that caught owner-directors

Income tax for England, Wales and Northern Ireland in 2026/27: a personal allowance of £12,570, 20% on the first £37,700 of taxable income, 40% from £37,701 to £125,140, and 45% above that — a higher-rate threshold of £50,270. Both the personal allowance and the basic rate limit are frozen until 5 April 2031, confirmed at Budget 2025, with Finance Bill 2025-26 legislating 2028/29. HMRC's own estimate is that the freeze brings 700,000 more individuals into income tax by 2030/31 than CPI indexation would have.

For a partner, that plus Class 4 National Insurance at 6% between £12,570 and £50,270 and 2% above gives a marginal cost on profit share of 42% above £50,270 and 47% above £125,140. And a partner is taxed on the profit share allocated to them whether or not they draw it — which is why a practice that allocates generously and pays drawings conservatively hands its partners a tax bill on money still sitting in the practice.

For an owner-director, the material 2026/27 change is dividends. From 6 April 2026 the ordinary rate is 10.75% and the upper rate 35.75%, each two percentage points up on the previous year. The additional rate is unchanged at 39.35% and the allowance is still £500.

Dividend band	To 5 April 2026	From 6 April 2026
Ordinary rate	8.75%	10.75%
Upper rate	33.75%	35.75%
Additional rate	39.35%	39.35%
Dividend allowance	£500	£500

An illustrative example. A partner-director takes £40,000 of dividends, all falling in the higher band. After the £500 allowance, £39,500 is taxable. At 35.75% that is £14,121.25. At the old 33.75% it would have been £13,331.25. The same money costs £790 more. Two points is not dramatic on its own; it is dramatic when it lands on top of employer National Insurance at 15% above a £5,000 secondary threshold, which has already made the traditional low-salary strategy more expensive than it was.

None of that makes a company wrong. It changes where the crossover sits, and the crossover is the whole question — see incorporation for vets.

The way out

Structure the entry so the exit still qualifies

Business Asset Disposal Relief is the reason a buy-in agreement should be read with a sale in mind, because every condition is tested over the two years before the disposal — so a share structure that fails the test is usually failing it years before anybody notices.

Disposal date	BADR rate
On or before 5 April 2025	10%
6 April 2025 to 5 April 2026	14%
From 6 April 2026	18%

The conditions, all requiring at least two years before the disposal:

Sole trader or partner: you are a sole trader or a business partner and have owned the business for at least two years.
Shareholder: you are an employee or office holder of the company, and the company's main activities are trading rather than non-trading activities like investment. A property company sitting inside the structure is worth looking at hard on that limb.
The personal company test for non-EMI shares: at least 5% of shares and 5% of voting rights, plus entitlement to 5% of either profits and assets on a winding up or of the proceeds on a disposal. Three limbs, and a buy-in of a small non-voting shareholding can satisfy the first and fail the others.

The strategic point about the 18% rate is that it changes the urgency rather than the answer. At 18%, BADR sits within six points of the 24% main higher rate of capital gains tax — so the relief is worth having, and it is no longer worth reorganising a career around. A decade ago the gap was wide enough to justify timing a sale; it is not any more. Selling to a corporate group takes that further.

One figure we will not state

We do not publish a BADR lifetime limit on this site. The figure most people quote was not stated on the gov.uk page behind our research, so we treat it as a number to establish for your own position rather than one to assert on a web page. It matters for a second disposal far more than a first.

How this profession is actually regulated

The RCVS regulates vets. It does not regulate practices.

There is no ownership restriction

Non-vets have been able to own a UK veterinary practice since 1999, and the RCVS has no statutory power to regulate the businesses vets work in — only the individual veterinary surgeons and veterinary nurses on its registers. The Practice Standards Scheme is, in the RCVS's own words, a voluntary accreditation.

The CMA identified exactly this in its final report of 24 March 2026: that the system of regulation applies only to veterinary professionals and not to the businesses in which they work.

One registration is compulsory

If your practice supplies or stores medicines you must register the premises with the RCVS, which holds the Register of Veterinary Practice Premises on behalf of the VMD. The fee is per premises — a main site and two branches is three registrations — at £38 a year in England and Wales, VAT exempt, renewing on 1 April.

Defra's consultation on reforming the Veterinary Surgeons Act 1966 closed on 25 March 2026 and proposes licensing veterinary businesses. The response has not been published and nothing is in force.

Buy-in FAQs

Questions incoming partners ask

What am I actually buying into?

In almost every independent practice, goodwill and client relationships — and very little registered intellectual property. That matters more than it sounds, because corporation tax relief on purchased goodwill is only available where the acquisition includes qualifying intellectual property, and is then capped at six times the cost of that IP. A practice whose value sits entirely in reputation and a client list usually generates no relief at all for a corporate buyer. It is one of the few genuinely verifiable reasons a buy-in is structured as shares in one deal and assets in another.

How does the associated companies rule affect a practice buy-in?

The £50,000 and £250,000 corporation tax limits are divided by one plus the number of associated companies. A trading practice company alongside a property company holding the premises and a service company used for locum work means dividing by three: the small profits limit becomes £16,667 and the upper limit £83,333. Association is not only about shareholdings — it can arise through substantial commercial interdependence, meaning financial, economic and organisational links. A buy-in that adds a company to the group changes the tax rate on profits that have not moved at all.

Did dividend tax really go up in April 2026?

Yes, and it is the most material 2026/27 change for anybody drawing profit from a practice company. From 6 April 2026 the ordinary dividend rate is 10.75% and the upper rate is 35.75%, each two percentage points higher than the year before. The additional rate is unchanged at 39.35% and the dividend allowance is still £500. On £40,000 of dividends falling in the higher band, £39,500 is taxable after the allowance, so the bill is £14,121.25 rather than the £13,331.25 it would have been — £790 more for taking exactly the same money.

What relief will I get when I eventually sell my share?

Business Asset Disposal Relief, if you qualify. 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% for disposals from 6 April 2026. Every condition requires at least two years before the disposal. As a sole trader or partner you must have owned the business for two years. As a shareholder you must be an employee or office holder and the company's main activities must be trading, and for non-EMI shares you need at least 5% of shares and voting rights plus entitlement to 5% of profits or assets or of disposal proceeds.

Is a partnership or a company better for a buy-in?

It depends on what happens to the profit rather than on what happens at the deal. A partner is taxed on their profit share whether or not they draw it, at 42% marginally above £50,270 once you add 2% Class 4 National Insurance to 40% income tax, and 47% above £125,140. A company pays 19% up to £50,000 and 25% above £250,000, with an effective 26.5% on the slice between — but the money is only yours after extraction, at 10.75% or 35.75% on dividends from 6 April 2026. A company wins where profit is retained and reinvested.

Can a non-vet buy into a veterinary practice?

Yes. There is no ownership restriction on a UK veterinary practice and there has not been since 1999. The RCVS regulates individual veterinary surgeons and veterinary nurses, not the businesses they work in, and it has no statutory power to do otherwise. That is why a practice manager, a spouse or an outside investor can hold shares, and it is the structural reason six corporate groups now own more than 60% of UK practices. Defra has consulted on licensing veterinary businesses, but the response is unpublished and nothing is in force.

Ready when you are

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A free conversation: what the practice earns, what the structure does to your tax, how many companies are dividing the corporation tax bands, and whether the exit will still qualify for relief in ten years.

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