Business owners selling up after years of hard work have long benefited from Business Asset Disposal Relief (BADR) – a key incentive that lowers the Capital Gains Tax (CGT) rate on qualifying disposals. But from 6 April 2025, the relief became less generous. The CGT rate on qualifying gains under BADR rose from 10% to 14%, with a further increase to 18% already set for April 2026.

This change has a direct impact on the value individuals can retain when selling a business or shares. While the £1 million lifetime allowance remains unchanged, the increased rate means a higher tax bill on the same amount of gain – reducing the net proceeds that many had counted on for retirement, reinvestment or new ventures.

Although those who completed their business exit before April 2025 will have secured the previous 10% rate, many were unable to meet that deadline. If that includes you, the good news is that all is not lost. There is still time to make informed decisions and mitigate the effects of the upcoming rate rise in 2026 – but the window to act is narrowing.

What is Business Asset Disposal Relief?

Previously known as Entrepreneurs’ Relief, BADR is designed to encourage entrepreneurship by reducing the CGT rate on the sale of qualifying business assets. It applies in situations where an individual sells either all or part of their business, or disposes of shares in a trading company. For qualifying disposals, the CGT rate is lower than standard rates – but as recent changes show, this advantage is shrinking.

The relief is still available, but now at a higher rate. Those selling from April 2025 onwards will face a 14% CGT rate on qualifying gains, and from April 2026 this will rise again to 18%. The lifetime gains limit of £1 million, however, remains in place – meaning that gains up to this threshold can still qualify for the reduced rate (albeit a less generous one than before).

Who is Eligible to Claim BADR?

To claim BADR, the individual must meet specific conditions for a minimum of two years prior to the date of sale. These rules differ slightly depending on whether you’re selling a business or shares.

You may qualify if:

  • You’ve owned your business (or shares) for at least two years
  • You’re a sole trader or partner, or
  • You’re an employee or office holder in a trading company
  • You hold at least 5% of the shares, voting rights, and potential proceeds

There are further considerations if your shares were acquired under an Enterprise Management Incentive (EMI) scheme, so professional advice is essential to ensure the conditions are met and your claim is valid.

Why Timing Matters

Many business owners had aimed to complete a sale before April 2025 to take advantage of the lower 10% rate. However, business sales are complex and often subject to delays – especially in challenging economic conditions. For those who missed the deadline, planning for the next rate rise in April 2026 could still make a meaningful difference to the tax paid.

If you’re considering a business disposal within the next 12 months, it’s worth reviewing your position now. Whether that means accelerating a sale, exploring alternative exit routes or restructuring your affairs, early action can offer more flexibility and help maximise the value retained.

Talk to Our Team

Changes to tax reliefs like BADR highlight the importance of proactive planning. Mario Mastantuono at Fisher Jones Greenwood LLP, is here to guide you through every step, for further information or to discuss your specific situation, please do not hesitate to contact our team using our online contact form or call 08081 891 596.