From 6 April 2026, BADR gains are taxed at 18% — up from 14% in 2025/26 and 10% before April 2025. In the space of two years, the rate has nearly doubled. This article explains what BADR is, who qualifies, what the new rate means in practice, and why speaking to an accountant now — even if a sale is still years away — is time well spent.

What Is Business Asset Disposal Relief?

BADR — formerly known as Entrepreneurs’ Relief — is a Capital Gains Tax relief that reduces the rate of tax you pay when you sell or wind up a qualifying business. Without it, the standard CGT rate on business gains is 24% for higher and additional rate taxpayers (or 18% for those whose total income and gains stay within the basic rate band). BADR reduces that rate significantly for qualifying disposals, up to a lifetime limit of £1 million of gains.

The relief was introduced in 2008 with a lifetime limit of £1 million, which was then raised over the years to a peak of £10 million before being cut back to £1 million in March 2020, where it has remained. The rate itself held at 10% for seventeen years before the Autumn Budget 2024 set it on a rapid upward trajectory.

How the Rate Has Changed

For higher and additional rate taxpayers, BADR still offers a meaningful saving — 6 percentage points against the 24% standard rate. On a £500,000 gain, that is a £30,000 difference. On a gain of £1 million — the maximum that qualifies — the saving is £60,000.

Who Qualifies for BADR?

BADR is available to individuals — not companies or discretionary trusts — and the qualifying conditions must have been met for at least two years up to the date of disposal. The rules differ slightly depending on whether you are selling a sole trade business, a partnership interest, or shares in a company.

For sole traders and partnerships, you must have owned and operated the business for at least two years before the disposal, and be selling all or part of the business as a going concern (or disposing of assets within three years of the business ceasing).

For company shareholders, all of the following must have applied throughout the two years ending on the disposal date:

The £1 million lifetime limit is cumulative — it covers all qualifying BADR gains you have ever made, not just the current disposal. If you have claimed BADR on a previous sale, the remaining limit is reduced accordingly.

What the Numbers Mean in Practice

To make this concrete, consider a director and majority shareholder selling a trading company and making a qualifying gain of £500,000 after deducting the annual exempt amount (currently £3,000). As a higher rate taxpayer, the comparison looks like this:

The saving from BADR in 2026/27 is still real and worth claiming — but the relief that once saved a higher rate taxpayer £70,000 on a £500,000 gain now saves £30,000. The value of the relief has more than halved in two years. On the maximum qualifying gain of £1 million, the maximum saving from BADR has fallen from £140,000 to £60,000.

A Note on Timing — and Anti-Forestalling Rules

It is worth being clear about how the date of disposal is determined, because it is not always what people assume. For the purposes of BADR, the relevant date is generally the date an unconditional contract is entered into — not the completion date. However, HMRC has introduced specific anti-forestalling rules around the April 2026 rate change that override this in certain circumstances.

Why Early Planning Pays Off

The direction of travel on BADR is clear. In two years the rate has gone from 10% to 18%. The lifetime limit was cut from £10 million to £1 million in 2020 and has not recovered. Successive changes have reduced both the scope and the value of this relief — and there is no reason to expect that direction to reverse.

None of this means you should sell your business before you are ready. Forcing a sale for tax reasons alone rarely makes commercial sense, and getting the business to the right point — the right buyers, the right value, the right conditions — matters far more than saving a few percentage points. What it does mean is that planning for an exit well in advance gives you choices that last-minute planning does not.

Specifically, early planning allows you and your accountant to:

BADR remains a genuinely valuable relief for higher and additional rate taxpayers. A £60,000 saving on a maximum qualifying gain is still £60,000 — and for many business owners, the gain from a lifetime of work will be the single largest financial event they ever navigate. Getting the planning right is worth the conversation.