Eligibility for Business Asset Disposal Relief
Business Asset Disposal Relief (BADR) can significantly reduce the Capital Gains Tax due when selling a business or shares, but with higher rates coming from April 2026, timing and eligibility matter more than ever.
BADR applies to the sale of a business, shares in a trading company, or an individual’s interest in a trading partnership. When this relief is available, a reduced Capital Gains Tax (CGT) rate, currently 14%, is applied instead of the standard rate. These rates will increase in the new tax year starting on 6 April 2026 to 18%. As a result, disposals made after April 2026 will face a higher CGT rate.
To qualify for BADR, certain conditions must be met:
Sale of a Business or Business Closure:
- You must be a sole trader or business partner; and
- You must have owned the business for at least 2 years leading up to the sale or closure.
- You must dispose of your business assets within 3 years to qualify.
Sale of Shares or Securities:
Both of the following must apply for at least 2 years up to the date you sell your shares:
- You must be an employee or office holder of the company (or a company within the same group).
- The company’s main activities must involve trading, not non-trading activities like investment, or it must be the holding company of a trading group.
Additional rules can apply if the shares are from an Enterprise Management Incentive (EMI).
Currently, you can claim a total of £1 million in BADR over your lifetime, allowing you to qualify for the relief multiple times. The lifetime limit may be higher if you sold assets before 11 March 2020.
