If you’re planning to sell your business, act fast. From April 2025, the tax benefits of Business Asset Disposal Relief (BADR) are reducing and from April 2026, they’ll shrink even more.
Whether you’re selling a trading company or winding down a business, BADR can offer significant Capital Gains Tax (CGT) savings – but the rules are changing, and poor timing could cost you thousands.
What Is Business Asset Disposal Relief (BADR)?
Business Asset Disposal Relief formerly known as Entrepreneurs’ Relief allows business owners to pay a reduced rate of Capital Gains Tax when they sell all or part of their business.
Currently, qualifying gains are taxed at 10% instead of the standard CGT rates (which can be up to 24% for higher-rate taxpayers). However, the government is phasing in two major changes over the next tax years:
- 📅 From 6 April 2025: BADR gains will be taxed at 14%
- 📅 From 6 April 2026: BADR gains will rise again to 18%
➡️ That’s a near doubling of tax in just two years.
Do You Qualify for BADR?
To claim BADR, you must meet specific conditions for at least two years up to the date of sale:
✅ You’re selling all or part of a business you’ve owned as a sole trader or partner
✅ Or, you’re selling shares in a ‘personal company’ (you own at least 5%, are an employee/director, and the company is trading)
✅ You’ve held the business or shares for at least 2 years
✅ You haven’t already exceeded the £1 million lifetime BADR limit
📌 The £1 million limit hasn’t changed – so once you hit it, no further gains qualify for the relief.
Anti-Avoidance Warning: Sale Timing Matters
A key trap to watch out for:
If you sign a sale contract between 30 October 2024 and 5 April 2026, but the sale completes after 6 April 2025, you will still pay the new 14% or 18% rate.
It’s not enough to simply agree the sale completion date is what counts for tax.
BADR in Action: Worked Examples
✅ Sale Before 6 April 2025
- Gain: £500,000
- BADR Rate: 10%
- Tax Due: £50,000
❌ Sale After 6 April 2025
- Gain: £500,000
- BADR Rate: 14%
- Tax Due: £70,000
You’d pay an extra £20,000 in tax by missing the deadline.
Can You Still Benefit from BADR?
Yes – even with the rate increases, BADR will still offer savings versus full CGT (18%–24%).
But:
- The window to pay just 10% closes soon
- Complexities around timing, associated disposals, and company structure could risk your eligibility
How to Claim BADR
You can claim BADR via your Self Assessment tax return, or by making a standalone written claim.
- For disposals in 2024–25: Claim by 31 January 2027
- For disposals in 2025–26: Claim by 31 January 2028
Be sure to maintain detailed records of shareholdings, employment status, and trading activity.
Final Thoughts: Act Early, Save More
With the CGT rate on qualifying BADR gains set to rise from 10% to 14% and then 18%, early planning is more important than ever. If you’re thinking about selling your business or shares, don’t wait.
An early review could save you tens of thousands in tax.
Need Advice on Selling Your Business Tax-Efficiently?
We help business owners plan their exits and structure disposals to maximise tax savings under BADR and other reliefs.
📞 Book a consultation today
💬 Let’s talk about your options before the deadlines hit.
ALL THIS AND MORE
We offer all the above as part of our full Tax Services and Accounting and can also help you with Capital Gains Tax, Inheritance Tax, Retirement Planning, even filling out your Self-Assessment Tax Returns for you.
