Business Asset Disposal Relief rose from 14% to 18% on 6 April 2026. Here is what that means if you are selling a business, closing a company, or planning an exit.
Business Asset Disposal Relief (BADR) — formerly Entrepreneurs' Relief — lets you pay a reduced rate of Capital Gains Tax when you sell qualifying business assets. From 6 April 2026, that reduced rate increased from 14% to 18%.
This is the second increase in two years. The rate was 10% until April 2025, rose to 14%, and has now reached 18%. The lifetime limit remains at £1 million of qualifying gains.
| Period | BADR Rate | Tax on £500k Gain | Tax on £1m Gain |
|---|---|---|---|
| Before April 2025 | 10% | £50,000 | £100,000 |
| April 2025 – March 2026 | 14% | £70,000 | £140,000 |
| April 2026 onwards | 18% | £90,000 | £180,000 |
| Without BADR (higher rate) | 24% | £120,000 | £240,000 |
BADR at 18% still saves you money compared to the standard 24% CGT rate. On a £1 million gain, you save £60,000. The relief is less generous than before, but it remains well worth claiming.
The rate increase affects anyone disposing of qualifying business assets from 6 April 2026 onwards. This includes:
To claim BADR on shares in your company, you must meet all of these conditions for at least 2 years before the disposal:
HMRC introduced new "excluded contract" rules for disposals after 6 April 2026. If you signed a contract before the deadline specifically to lock in the lower 14% rate, and the parties are connected or the contract was created for a tax advantage, HMRC may apply the 18% rate instead. There is a £100,000 de minimis threshold below which no claim is needed.
If you are a contractor winding down your limited company, your route to closing the business determines how the reserves are taxed:
An MVL typically costs £1,500–£3,000 in liquidator fees. For reserves above £40,000, the tax saving almost always exceeds the cost.
From 6 April 2026, Business Asset Disposal Relief is taxed at 18% on qualifying gains up to the £1 million lifetime limit. This is up from 14% in 2025/26 and 10% before that. Gains above £1 million are taxed at the standard CGT rate of 24% for higher-rate taxpayers.
Yes. BADR still exists and offers a meaningful saving — 18% vs the standard 24% CGT rate. On a £500,000 qualifying gain, you save £30,000 compared to paying the full CGT rate.
At the 18% rate, BADR saves £60,000 on a £1 million qualifying gain compared to the standard 24% CGT rate. The tax bill would be £180,000 with BADR vs £240,000 without.
Yes, but only if you close via a Members' Voluntary Liquidation (MVL). Distributions via informal strike-off are treated as income, not capital gains, so BADR does not apply. For reserves above £25,000, an MVL is required.
You can claim BADR on the sale of shares in a personal trading company (where you own at least 5% of shares and voting rights for 2+ years), the disposal of a whole business or part of a business, and certain qualifying business assets. You must also be an officer or employee of the company.
We can model your BADR position and find the most tax-efficient route — whether that is a sale, MVL, or restructure. From £19.99/month.
This article is for general information only and does not constitute tax advice. Please consult a qualified accountant for advice specific to your circumstances.
