Understanding Business Asset Disposal Relief (BADR)
Business Asset Disposal Relief (BADR) provides an effective reduced rate of Capital Gains Tax (CGT) on the sale of a qualifying business, shares in a trading company, or an individual's interest in a trading partnership. The relief can still provide substantial tax savings for business owners exiting their businesses.
Upcoming changes to Capital Gains Tax rates under BADR
As part of the Autumn 2024 Budget measures, the effective CGT rate for BADR gains increased from 6 April 2025. The CGT rate for BADR is now 14%, up from 10% in the previous year, for disposals on or after 6 April 2025. The CGT rate for BADR will increase further to 18% for disposals on or after 6 April 2026.
Capital Gains Tax rates: Timeline for BADR changes
- From 6 April 2025 to 5 April 2026: gains qualifying for BADR will be taxed at 14%.
- From 6 April 2026 onwards: gains qualifying for BADR will be taxed at 18%.
- Anti-forestalling rules: specific rules are in place to prevent tax avoidance strategies ahead of these changes.
Lifetime Limit for claiming BADR
The Lifetime Limit for claiming BADR on qualifying gains is currently £1 million, allowing business owners to claim relief on multiple disposals, accumulating up to this limit.
Investors' Relief: Changes in Lifetime Limit and tax rate
In contrast, the Lifetime Limit for Investors’ Relief was reduced from £10 million to £1 million for qualifying disposals made on or after 30 October 2024. The CGT rates for Investors' Relief align with those of BADR.
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With the changes to BADR and CGT rates, it is essential to have a well-structured tax strategy in place. Our compliance and advisory services assist business owners in navigating complex tax regulations, minimising liabilities, and ensuring full compliance with tax legislation and HMRC requirements. The rules may be changing, but your opportunity to maximise business value isn’t. Our experienced advisors help you plan, prepare, and execute a strategic business exit—from tax optimisation to full compliance and beyond.