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 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.
Published 30 May 2026 · Updated 27 October 2026 · 5 min read
What changed on 6 April 2026?
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
Key Takeaway
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.
Who is affected?
The rate increase affects anyone disposing of qualifying business assets from 6 April 2026 onwards. This includes:
Business owners selling their company — whether a trade sale, management buyout, or sale to a third party
Contractors closing a limited company — via Members' Voluntary Liquidation (MVL) to access capital gains treatment
Partners leaving a partnership — disposing of their share of the business
Sole traders selling their business — the whole business or a distinct part of it
Family business transfers — where shares or assets are sold (not gifted) between family members
What qualifies for BADR?
To claim BADR on shares in your company, you must meet all of these conditions for at least 2 years before the disposal:
You own at least 5% of the ordinary share capital
You hold at least 5% of the voting rights
You are entitled to at least 5% of the distributable profits and assets on winding up
You are an officer or employee of the company
The company is a trading company (or the holding company of a trading group)
⚠ Watch Out — Excluded Contracts
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.
Contractors: closing your limited company
If you are a contractor winding down your limited company, your route to closing the business determines how the reserves are taxed:
Reserves under £25,000: You can use the informal strike-off route. However, distributions are treated as income (taxed at dividend rates), not capital gains. BADR does not apply.
Reserves over £25,000: A Members' Voluntary Liquidation (MVL) is required to access capital gains treatment. BADR can then be claimed at 18%, saving you significant tax compared to dividend rates (which can reach 39.35%).
An MVL typically costs £1,500–£3,000 in liquidator fees. For reserves above £40,000, the tax saving almost always exceeds the cost.
Planning your exit: what to do now
Check your qualifying conditions. Make sure you have met the 2-year ownership and employment tests. If you are close to 2 years, it may be worth waiting rather than disposing too early.
Get your accounts up to date. Clean, up-to-date accounts speed up any disposal process — whether that is a sale, MVL, or restructure.
Consider your lifetime limit. If you have claimed BADR before, your remaining £1 million allowance may be reduced. Any gains above the limit are taxed at the full CGT rate.
Talk to your accountant. Every situation is different. We can model the tax impact of selling now vs later, and help you structure the disposal to maximise relief.
Frequently Asked Questions
What is the BADR tax rate from April 2026?
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.
Can I still claim BADR if I sell my business after April 2026?
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.
How much tax does BADR save on a £1 million gain?
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.
Does BADR apply to contractors closing a limited company?
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.
What qualifies for Business Asset Disposal Relief?
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.
Planning a business exit?
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.
Official guidance
For the latest HMRC and Companies House guidance, see Business Asset Disposal Relief. AccTek Ltd is an independent accountancy firm and is not affiliated with HMRC or GOV.UK.
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