Key takeaways
- Small practices are usually valued at a multiple of gross recurring fees; ICAEW says there is no single correct multiple.
- Consolidators backed by private equity often price on a multiple of EBITDA or profit, and ACCA says many only look at practices with turnover of at least £1 million.
- Clients cannot be sold like stock: under the ICAEW Code of Ethics they must be told and must agree to the new firm before it does any work.
- An ICAEW member selling a practice must keep at least 24 months of run-off professional indemnity cover for pre-sale work.
- Business Asset Disposal Relief taxes qualifying gains at 18% for disposals from 6 April 2026.
- The BADR lifetime limit falls from £1 million to £500,000 for disposals on or after 6 April 2027, announced in Budget 2026.
- Deferred payments linked to client retention, with a clawback if fees fall short, are a normal part of a practice sale.
Most UK accounting practices sell for a multiple of their gross recurring fees, paid partly on completion and partly later depending on how many clients stay. Larger firms sold to consolidators are more often priced on profit. Tax timing matters in 2026: the Business Asset Disposal Relief lifetime limit halves to £500,000 for disposals from 6 April 2027.
How is an accounting practice valued?
A practice is usually valued by applying a multiple to its fees or profits. ICAEW’s buying and selling fees helpsheet, updated 19 August 2025, lists the usual starting points: gross recurring fees (GRF), turnover, future fee income and profitability. It says there is no single correct multiple; buyer and seller agree it.
| Buyer type | Usual basis | Typical target |
|---|---|---|
| Local practice | Multiple of GRF | Small blocks of fees |
| Consolidator or PE | Multiple of EBITDA or profit | Turnover of £1m or more |
| Management buyout | Agreed multiple, often deferred | Firms with strong staff |
ACCA says consolidators can pay higher profit multiples for the right practice, but often only consider turnover of at least £1 million unless the firm has a strong niche.
There is no official benchmark for GRF multiples, and published figures come from buyers and brokers. For example, Zmartly, an accounting firm that buys practices, anchors value at about 0.8 times GRF within a 0.6 to 1 times range in its January 2026 factsheet. Treat any figure like this as a starting point, not a price.
What pushes the price up or down?
Buyers pay more for fees that are likely to stay. ACCA lists features that make a practice more attractive:
- clients on monthly subscriptions, giving predictable cash and no debtors
- a team that can run the practice without you
- your willingness to help during the handover
- up-to-date cloud software and streamlined processes
- a brand built around the firm, not the owner
- a younger, growing client base that buys advisory work
Price falls where a few clients make up most of the fees, where work is mostly one-off, or where the owner does all the client work. See business valuation methods for the general approaches.
How does the sale process work?
A practice sale follows a set order, because client confidentiality limits what you can share and when.
- Prepare the numbers. Gather GRF, client numbers by fee band, work in progress and staff costs.
- Sign a confidentiality agreement. ICAEW says to document a confidentiality and non-poaching agreement before sharing detail, ideally with a hold-harmless clause.
- Share summary data first. Early talks usually use total fees and client numbers by fee bracket only.
- Agree heads of terms. Price, multiple, payment schedule, clawback and your role after the sale.
- Allow due diligence. The buyer reviews files, accounts and fee notes once terms are close.
- Write to clients. Tell them who will act for them and ask them to agree.
- Hand over. The buyer issues new engagement letters and completes its own AML checks.
- Arrange run-off cover. Keep professional indemnity cover for your pre-sale work.
What must you tell clients?
Clients must be told about the sale and must agree before the buyer does any work. ICAEW points to section 320 of its Code of Ethics: clients have the right to choose their accountant, so a transfer cannot be imposed. You usually need client authority before disclosing confidential information, under section 114.
For data protection, ICAEW says legitimate interests is often the lawful basis for passing personal data in client files, though consent may suit where the client is the data subject. Update your privacy notice if it does not cover a sale. Formal resignation steps apply to audit, ATOL reporting, insolvency and reserved probate work.
How are payments and clawbacks structured?
Most deals pay part of the price on completion and the rest later, linked to client retention. ICAEW says clawback reduces the payment if clients leave or fees fall short, and advises agreeing a maximum clawback. A common pattern is part on completion and the balance over one to three years. Agree in writing the retention measure, the clawback cap, what happens if a client returns to you, and your role during the handover.
How is the sale taxed?
A gain on selling a practice is usually subject to Capital Gains Tax, and Business Asset Disposal Relief (BADR) can cut the rate. GOV.UK says BADR is charged at 18% on qualifying gains from 6 April 2026. You must have owned the business, as a sole trader or partner, for at least 2 years up to the sale.
Budget 2026 cut the lifetime limit from £1 million to £500,000 for disposals on or after 6 April 2027. The HMRC policy paper, published 29 October 2026, includes anti-forestalling rules for contracts made before that date that complete after it.
ICAEW reports a proposed founders’ relief at 10% from 6 April 2027, but it is under consultation and includes growth and innovation tests. Do not plan a practice sale around it yet.
What sellers should do now
- Check your timetable. A disposal before 6 April 2027 keeps the £1 million BADR limit, subject to the anti-forestalling rules.
- Tidy recurring fees. Move clients to engagement letters and monthly billing where you can.
- Reduce owner dependence. Hand client contact to staff before you market the firm.
- Talk to your insurer. Price 24 months of run-off cover into your figures.
Related guides: succession planning for sole practitioners, professional indemnity insurance, client due diligence and how to sell a business.
Frequently asked questions
How much is an accounting practice worth?
There is no official figure. Small practices are usually priced at a multiple of gross recurring fees, and buyer material in 2026 often quotes around 0.6 to 1 times GRF, but the final price depends on retention, client mix and deal terms.
Do clients have to agree to a practice sale?
Yes. Under the ICAEW Code of Ethics clients must be told and must agree before the buyer does any work for them.
What rate of tax applies when I sell my practice?
If Business Asset Disposal Relief applies, qualifying gains are taxed at 18% from 6 April 2026. The lifetime limit is £1 million until 5 April 2027 and £500,000 after that.
Can the buyer rely on my AML checks?
ICAEW says the buyer may rely on your customer due diligence with your written consent, but the buyer stays responsible for its own ongoing CDD.
Sources
Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance on 6 November 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.