Business Asset Disposal Relief (BADR) can significantly reduce the Capital Gains Tax due when selling a business or shares, but with higher rates coming from April 2026, timing and eligibility matter more than ever.
BADR applies to the sale of a business, shares in a trading company, or an individual’s interest in a trading partnership. When this relief is available, a reduced Capital Gains Tax (CGT) rate, currently 14%, is applied instead of the standard rate. These rates will increase in the new tax year starting on 6 April 2026 to 18%. As a result, disposals made after April 2026 will face a higher CGT rate.
To qualify for BADR, certain conditions must be met:
Sale of a Business or Business Closure:
- You must be a sole trader or business partner; and
- You must have owned the business for at least 2 years leading up to the sale or closure.
- You must dispose of your business assets within 3 years to qualify.
Sale of Shares or Securities:
Both of the following must apply for at least 2 years up to the date you sell your shares:
- You must be an employee or office holder of the company (or a company within the same group).
- The company’s main activities must involve trading, not non-trading activities like investment, or it must be the holding company of a trading group.
Additional rules can apply if the shares are from an Enterprise Management Incentive (EMI).
Currently, you can claim a total of £1 million in BADR over your lifetime, allowing you to qualify for the relief multiple times. The lifetime limit may be higher if you sold assets before 11 March 2020.
Recent Comments