Business Asset Disposal Relief – effective tax rate rises to 18%

What is Business Asset Disposal Relief (BADR)?  

BADR is a reduced rate of capital gains tax (CGT) for people selling their business, business assets or shares in their company. It must be claimed via your self-assessment tax return and is subject to a lifetime limit of £1 million. Find our full guide on BADR here. 

Period	BADR Rate	Notes
Before 6th April 2025	10%	Historic rate (previously BADR was called Entrepreneurs' Relief)
6th April 2025 – 5th April 2026	14%	One tax rate at this rate
From 6th April 2026	18%	New rate - applies to all qualifying disposals from this date

BADR was previously known as Entrepreneurs’ Relief and until April 2025 had been set at 10% since its introduction in 2008. It was a replacement for a previous relief, taper relief. Originally the lifetime limit was £10 million but this was reduced to £1 million in 2020.  

The BADR rate was increased to 14% for the 2025/26 tax year and from 6th April 2026, the rate will increase again to 18%.  

Who qualifies for BADR?  

BADR works as a reduced rate of CGT on a qualifying disposal of business assets. You may qualify for BADR if you: 

• Are a sole trader selling or closing your business 
• A partner in a partnership selling or closing your business  
• Sell business assets within three years of your business closing 
• Sell shares in a ‘personal company’ i.e. one where you have 5% or more of the voting share capital in a trading company and have held the shares for two years or more 

The BADR qualifying conditions are complex and strict so if you think you may qualify you should speak to an accountant.  

If BADR does not apply, you will be subject to the standard rates of CGT which are 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers. Scottish taxpayers should use the England, Wales and Northern Ireland tax bands to calculate their CGT rate as they do not align with Scottish income tax bands. 

What does the rate increase mean in practice? 

For example, let us assume that you are a director and the sole shareholder of a trading company, selling your business for a £1 million gain.  

You have not used any of your BADR lifetime allowance previously and you have held the shares for more than two years, so the entire £1 million gain is subject to BADR. 

5th April sale 

£1,000,000 x 14% = £140,000 CGT to pay 

£1,000,000 - £140,000 = £860,000 net gain 

6th April sale 

£1,000,000 x 18% = £180,000 CGT to pay 

£1,000,000 - £180,000 = £820,000 net gain 

What are the anti-forestalling rules? 

Be careful of any rush to sign contracts for a business or share sale prior to a tax rate change, but only completing the transaction after the rate has changed. HMRC has ‘anti-forestalling’ rules in place to prevent this from happening and they will apply the new, higher tax rate to the sale. 

There are limited exceptions to the anti-forestalling rules but the criteria are detailed and strict.  You should seek professional advice if you believe this may be the case. 

What should business owners do now?  

If you are thinking of selling your business or personal company, then speak to an accountant as soon as possible for advice on whether you will qualify for BADR or any steps you can take to ensure you qualify in future.  

TaxAssist Accountants can help 

Call TaxAssist Accountants on 01234 331777 or our online contact form here. 

Last updated: 1st April 2026