The number in the heads of terms is not the number that reaches your bank account. Between the two sit professional fees, capital gains tax, and, in most advice firm deals, a payment structure that spreads the money over a period commonly running many months. Owners who plan around the headline figure tend to be surprised twice: once by how much comes off, and once by when the remainder actually arrives.
None of the deductions are mysterious. Each one can be estimated before you sign anything, and estimating them early changes decisions that are hard to reverse later: whether to run a share sale or an asset sale, how much deferred consideration you can genuinely afford to carry, and whether completing before or after a tax year end matters to you. This article works through the deductions in the order they bite, then walks a £600,000 headline price down to a net figure.
Start with the structure, because the structure sets the tax
Before any rate matters, the shape of the deal matters. A share sale puts the whole gain in your hands as a personal capital gain. An asset sale, where your limited company sells the client bank and you then extract the proceeds from the company, usually creates two layers: corporation tax inside the company, then personal tax on extraction. The gap between the two routes can be larger than every professional fee in the deal combined, which is why the asset sale versus share sale tax comparison deserves its own reading before you negotiate structure.
For the rest of this article, assume a share sale by an individual who qualifies for Business Asset Disposal Relief. That is the cleanest case and the one most retiring principals of directly authorised firms are aiming for. If your route is a sale of the client bank out of the company, or a structured asset sale to a national acquirer, the mechanics below still apply to the personal leg, but the corporate leg comes first and the arithmetic is different.
The tax layer: BADR and CGT at 2026-27 rates
For qualifying disposals from Mon 6th Apr 2026, Business Asset Disposal Relief taxes gains at 18 per cent, the final step of the phased increase from the old 10 per cent rate. The relief covers up to £1 million of qualifying gains per person over a lifetime, a limit confirmed in HMRC's HS275 helpsheet. For most owner-managed advice firms selling for under seven figures, the whole gain sits inside that limit.
Gains that do not qualify for BADR, or that exceed the lifetime limit, fall under the standard capital gains tax rates: for 2026-27, 24 per cent for higher-rate taxpayers, and 18 per cent for basic-rate taxpayers on gains within the basic rate band, rising to 24 per cent above it. The annual exempt amount for 2026-27 is £3,000. All of these are the rates as they stand for the 2026-27 tax year; an Autumn Budget can change them, so date any planning you do against them.
Two points about the tax layer catch sellers out. First, qualification for BADR is not automatic: the two-year conditions on shareholding, voting rights, employment or office, and the trading status of the company all need to hold at disposal, and a firm that has drifted into holding significant surplus cash or investments can find its trading status questioned. Check qualification with a tax adviser well before heads of terms, not after. The 18 per cent rate and what it means in practice gets fuller treatment in our article on Business Asset Disposal Relief in 2026.
Second, the tax is normally settled through Self Assessment, due by the 31 January following the end of the tax year in which the disposal happens. That timing interacts badly with deferred payment structures, which is the next layer.
The fee layer: what advisers cost
Three sets of professionals usually sit between you and completion, and their fees come off before you see anything. A broker or sale adviser is normally paid a percentage of the consideration, often with a minimum fee and sometimes with a success fee weighted towards completion. Legal fees on a share sale of a regulated firm are driven by the length of the warranty schedule, the negotiation over indemnities, and whether novation of client agreements or FCA change in control work is needed. Tax and accounting advice around the deal covers BADR qualification checks and completion accounts.
Fee levels vary too widely from deal to deal for any published range to be reliable, so get written quotes early and get them itemised. The spread is wide because deals are wide: a clean share sale with a well-kept data room sits at the cheap end, a contested negotiation with heavy warranty argument sits at the expensive end. What softens the blow slightly is that incidental costs of the disposal, such as broker and legal fees on the sale itself, are deductible in computing the capital gain: HMRC's guidance on working out a gain on shares lists fees among the costs you can deduct.
One thing the fee layer rewards is preparation. Much of the legal cost in an advice firm sale is generated by problems surfacing late: client agreements that do not permit assignment, files that do not support the recurring income figure, or corporate records that need tidying under time pressure. Firms that have done the work described in what buyers ask for, in the order they ask for it tend to spend less on lawyers, because the lawyers have less to fight about.
The timing layer: deferred consideration and earn-outs
Almost no advice firm sale pays 100 per cent on completion. The standard shape is an initial payment followed by one or more deferred tranches, contingent to some degree on client retention or income persistence, with the deferral commonly running many months. Two consequences follow for your net position.
The first is cash flow risk. Deferred consideration is a debt owed to you by the buyer, and its value depends on the buyer still being willing and able to pay when the tranche falls due, and on the retention tests being met. A £600,000 deal with 40 per cent deferred is, on completion day, a £360,000 receipt and a £240,000 promise. How to weigh and protect that promise is covered in deferred consideration and how to protect it.
The second is tax timing. Where the deferred amount is fixed and ascertainable at completion, the capital gains position is that the full amount is included in the disposal proceeds in the year of disposal, including tranches you have not yet received: that is HMRC's stated treatment of ascertainable deferred consideration. It is entirely possible to owe tax on money that is still sitting in the buyer's bank account. Earn-outs whose amount is unascertainable at completion are treated differently again: HMRC regards the right to receive those future payments as an asset in its own right, with its own computation when the payments arrive. The mechanics, and the specific trap of paying tax on money you have not received, are set out in how earn-outs are taxed.
The practical rule is simple: model your tax bill against the completion payment, not the headline price. If the tax due in the January after your sale exceeds the cash you will have received by then, the structure needs renegotiating or you need a funding plan for the gap.
A worked example: £600,000 headline to net
Take a directly authorised firm sold by its sole shareholder in a share sale completing in the 2026-27 tax year. Headline consideration £600,000, paid as £420,000 on completion and £180,000 deferred, fixed and ascertainable, payable across the following period subject to standard retention tests. The seller qualifies for BADR, has used none of the £1 million lifetime limit, has negligible base cost in the shares, and has no other gains in the year.
Fees first. Purely as an illustration, assume a broker at 3 per cent, £18,000; legal fees of £25,000; tax and completion accounts advice of £5,000. Your own quotes will differ, which is the point of getting them early. Total professional costs £48,000. Treat the broker and legal fees as deductible incidental costs of disposal.
Now the gain. Consideration of £600,000, less deductible costs of £43,000 (the broker and legal fees; the personal tax advice is kept outside the computation for caution), gives a gain of £557,000. Deduct the £3,000 annual exempt amount and the chargeable gain is £554,000. At the 2026-27 BADR rate of 18 per cent, the tax is £99,720.
So the full-deal picture is: £600,000 headline, less £48,000 of fees, less £99,720 of tax, leaving net proceeds of about £452,000, or roughly 75 per cent of the headline. That is a healthy outcome, and it is the outcome of the clean case: full BADR qualification, a fixed deferred element, no warranty claims, and every retention test met.
The completion-day picture is tighter. Cash received on day one is £420,000, less fees of £48,000, leaving £372,000. The tax bill of £99,720 falls due by the 31 January following the end of the 2026-27 tax year, and because the deferred £180,000 is ascertainable, that bill is computed on the whole £600,000 whether or not the deferred tranche has arrived by then. If retention slips and part of the deferred payment never comes, there are mechanisms to revisit the tax, but they involve claims and delay rather than an automatic refund. The estimator at /tools/net-proceeds-estimator/ lets you run this same walk with your own numbers, structure and fee assumptions.
Run the same example without BADR and the difference is stark: £554,000 at 24 per cent is £132,960, a swing of over £33,000 from qualification alone. Run it as an asset sale with a corporate layer and the swing is usually larger still. The rate you pay is a function of decisions made one to two years before completion, which is the strongest argument for early planning there is.
What to do with the number
Three uses, in order. First, sanity-check any offer against its net, not its headline: a lower headline with more cash on completion and a shorter deferral can leave you better off than a bigger number stretched thin over retention tests. Second, take the completion-day cash position to your tax adviser and confirm you can fund the January bill from money actually received. Third, if the net feels short of what you need, the levers are mostly on the value side rather than the tax side, and they take time to pull: the pieces sit across the tax and timing hub and its companion articles on structure and preparation.
Everything above starts from a headline figure, and the headline figure starts from what your firm is worth to a buyer. If you want a number of your own to react to before you model the deductions, the free IFA valuation calculator gives you a range and explains the factors affecting it.