What is Business Asset Disposal Relief?
Business Asset Disposal Relief (BADR), formerly known as Entrepreneurs Relief, reduces the rate of Capital Gains Tax on qualifying business disposals. From April 2026, qualifying gains are taxed at 18% instead of the standard 24% higher rate. The lifetime limit is £1,000,000 of gains. Once used, standard CGT rates apply to further qualifying disposals.
What disposals qualify for BADR?
BADR applies to the disposal of all or part of a trading business you own as a sole trader or partner, shares in your personal trading company where you hold at least 5% of shares and voting rights and are an officer or employee, and assets used in a business you are also disposing of. You must have owned the asset for at least 2 years before disposal.
What are the CGT rates on business assets in 2025/26?
Following the October 2024 Budget, CGT rates on most assets, including business assets, are 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers. BADR reduces the effective rate to 14% for qualifying disposals in 2025/26 and 18% from April 2026.
What is the annual CGT exempt amount?
Every individual has an annual CGT exempt amount of £3,000 in 2025/26. Gains up to this amount each tax year are tax-free. This allowance was significantly reduced from £12,300 in 2022/23 and cannot be carried forward to future years.