Business Asset Disposal Relief (BADR)

Description

Cuts the Capital Gains Tax rate on gains from selling or closing all or part of a business, up to a £1 million lifetime limit — the relief most sole traders, partners and owner-managers rely on when they finally sell up. Formerly called Entrepreneurs' Relief. The rate has been rising sharply: 10% on disposals up to 5 April 2025, 14% on disposals between 6 April 2025 and 5 April 2026, and 18% on disposals on or after 6 April 2026 (verified October 2026 on gov.uk's own BADR guidance and its Capital Gains Tax rates publication, which agree). Because the £1 million cap is a once-in-a-lifetime pot rather than an annual allowance, every qualifying disposal you ever make draws it down — use £400,000 on one sale and only £600,000 remains for any future one.

Eligibility summary

• Available across the whole UK (England, Scotland, Wales, and Northern Ireland).
• Applicant must be a registered business.

Notes

If you're closing rather than selling a business, you must dispose of the business assets within 3 years of the closure to qualify. The £1 million limit is a lifetime limit, not an annual one. Investors' Relief is a separate relief taxed at the same 18% rate for non-employee external investors in unlisted trading companies.

Shareholding

For shares (other than those acquired through an Enterprise Management Incentive scheme) you must have held at least 5% of both the shares and the voting rights for at least 2 years before the sale.

Applicant type

Sole trader, business partner, or an employee/office holder selling shares in a trading company; also available to trustees in some cases.

Ownership period

You must have owned the business for at least 2 years before the date of sale.