Business Asset Disposal Relief (BADR) lets you pay a lower rate of Capital Gains Tax when you sell all or part of a qualifying business or shares. The rate is 18% on gains from disposals made from 6 April 2026, up from 14% in 2025 to 2026 and 10% before that. You can claim up to £1 million of qualifying gains over your lifetime, as of October 2026.
BADR used to be called Entrepreneurs' Relief, and the rate rises are the headline: from 10% to 14% to 18% in two years. That changes the maths for anyone planning an exit, because 18% is now the same as the basic rate on other gains. Everything below comes from GOV.UK's BADR guide.
BADR rates by disposal date
| Disposal date | BADR rate |
|---|---|
| On or before 5 April 2025 | 10% |
| 6 April 2025 to 5 April 2026 | 14% |
| From 6 April 2026 | 18% |
For comparison, a higher or additional rate taxpayer pays 24% on gains that don't qualify for the relief, so the saving for them at 18% is 6 points. For a basic rate taxpayer with spare basic rate band, other gains are already taxed at 18% from 30 October 2024, so BADR saves them nothing on that slice.
Who qualifies: selling a business
If you're a sole trader or business partner selling all or part of your business, both of these must apply for at least 2 years up to the date of sale:
- You're a sole trader or business partner.
- You've owned the business for at least 2 years.
The same conditions apply if you close the business instead of selling it, but you must dispose of the business assets within 3 years.
Who qualifies: selling shares
For at least 2 years up to the sale, you must be an employee or office holder of the company (or one in the same group), and the company's main activities must be trading, not investment, or it must be the holding company of a trading group. Then one of these applies:
| Type of shares | Extra conditions |
|---|---|
| EMI shares | Bought after 5 April 2013, with the option granted at least 2 years before you sell |
| Other shares | A 'personal company' for 2 years: at least 5% of the shares and voting rights, plus at least 5% of distributable profits and assets on a winding up, or of the sale proceeds |
If your holding drops below 5% because the company issued new shares, you can elect to be treated as if you sold and re-bought just before the new issue, crystallising a gain that qualifies, and you can also elect to postpone the tax until you sell. If the company stops trading, you can still qualify if you sell within 3 years.
Assets you lent to the business
You can also claim on assets you owned personally and let your partnership or personal company use, such as premises, if you've sold at least 5% of your part of the partnership or your shares in the personal company, and the business used the assets for at least one year up to the sale or closure. Trustees selling trust assets may qualify too.
How to work out the tax
- Work out the gain on each qualifying asset.
- Add the gains together and deduct qualifying losses.
- Deduct your tax-free allowance. If you also have non-qualifying gains taxed at 24%, use the allowance against those first, because that saves more.
- Charge 18% on what's left (14% or 10% for earlier disposal dates).
- If you're a basic rate taxpayer, use your basic rate band against the BADR gains first, then any remainder against other gains.
Mistakes that cost people the relief
- Selling before the 2 year anniversary: every test runs for at least 2 years up to the date of sale, not the date you agree the deal.
- Missing the 5% personal company test after a new share issue, without making the election to crystallise the gain first.
- Closing a business and taking more than 3 years to dispose of the assets.
- Assuming an investment-heavy company counts: its main activities must be trading.
- Spending the annual tax-free allowance on BADR gains when other gains are taxed at 24%.
For disposals before 30 October 2024 the main Capital Gains Tax rates were different (10% and 20% for most assets), so if you're amending an older return, check the rate for the date of the sale.
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Lifetime limit and claim deadlines
There's no limit to how many times you can claim, but the lifetime total of gains is £1 million. You may be able to claim more if you sold assets before 11 March 2020; HMRC can confirm. You claim through your Self Assessment return or Section A of the BADR helpsheet, by these deadlines:
| Tax year of the sale or closure | Deadline to claim |
|---|---|
| 2025 to 2026 | 31 January 2028 |
| 2024 to 2025 | 31 January 2027 |
| 2023 to 2024 | 31 January 2026 (passed) |
If you're weighing a sale against taking profits out over time, compare the rates with our dividend allowance guide, and for the company's own tax see Corporation Tax.
The verdict
BADR is still worth having, but at 18% it's a smaller prize than it was. Check the 2 year tests early, especially the 5% personal company test after any share issue, and if you're a higher rate taxpayer use your annual allowance on the 24% gains, not the BADR ones. Then diarise the claim deadline, because it's almost two years after the tax year ends and easy to forget, and keep the sale documents with your return so the 2 year dates are easy to prove.
Frequently asked questions
What is the Business Asset Disposal Relief rate?
18% on gains from disposals made from 6 April 2026, 14% between 6 April 2025 and 5 April 2026, and 10% before that.
What is the lifetime limit for Business Asset Disposal Relief?
You can claim a total of £1 million of gains over your lifetime, as of October 2026.
How long do I need to own a business to get BADR?
At least 2 years up to the date you sell it, as a sole trader or business partner.
When is the deadline to claim BADR?
For a sale in the 2025 to 2026 tax year, 31 January 2028.
