Business Asset Disposal Relief (BADR) reduces the Capital Gains Tax (CGT) due when you sell qualifying business assets. The upcoming Business Asset Disposal Relief 2026 changes will affect how much tax business owners pay on disposal.
The government first introduced this relief in 2008 as Entrepreneurs’ Relief. It renamed the relief in April 2024. Since then, it has remained a key tax consideration for business owners planning an exit.
How Business Asset Disposal Relief Works
BADR allows individuals to pay a reduced rate of Capital Gains Tax on qualifying gains. For the 2025/26 tax year, these gains are taxed at an effective rate of 14%, up to the lifetime limit.
You can claim relief when you dispose of qualifying business assets. These include:
- A sole trade
- A partnership interest
- Shares in a personal company
- Assets held within a trust
Key Business Asset Disposal Relief 2026 Changes
From 6 April 2026, the CGT rate on qualifying BADR gains will increase from 14% to 18%.
This change reduces the overall tax advantage. However, BADR will still offer a lower rate than standard Capital Gains Tax.
The Lifetime Limit
The lifetime allowance remains at £1 million. You can claim BADR on qualifying gains up to this limit.
Once you exceed the threshold, standard CGT rates apply.
You can claim BADR multiple times. However, your total qualifying gains must stay within the lifetime allowance.
Eligibility Requirements
You must meet specific conditions to claim BADR. The relief applies to individuals and certain trusts when they make a material disposal of business assets.
If you sell shares, the company must qualify as your personal company. You must meet this condition for at least 24 months before disposal.
During this period:
- The company must operate as a trading company or holding company of a trading group
- You must act as an officer or employee
Some individuals own business assets personally, such as commercial property. If you withdraw from the business and sell the asset alongside your business interest, BADR may still apply. This falls under the associated disposal rules.
Planning Ahead
The relief will still offer tax savings after April 2026. However, the higher rate makes early planning more important.
You may want to review your business structure and exit plans. Depending on your situation, you could consider:
- Family succession planning
- Transferring ownership to an Employee Ownership Trust
- A phased business exit
Each option has different tax and commercial outcomes. You should seek professional advice before making decisions.
If you want to understand how these changes affect your business, contact our team. We can review your eligibility and help you structure your business tax efficiently.