Business Asset Disposal Relief (BADR)
Business Asset Disposal Relief, formerly known as Entrepreneurs’ Relief, offers a lower rate of Capital Gains Tax (CGT) when selling all or part of a business, shares in a trading company, or certain business assets.
From 6 April 2025, the CGT rate under BADR is 14% — up from the long-standing 10% rate. The £1 million lifetime limit remains, which means eligible business owners can still access meaningful savings, albeit less than under previous rules.
Who qualifies?
To claim BADR, you’ll need to meet the following criteria:
-
You’re selling all or part of a trading business (as a sole trader or partner), or
-
You’re disposing of shares in a personal trading company (one where you’re an employee/officer and own at least 5% of shares and voting rights), and
-
You’ve owned the business or shares for at least two years prior to sale.
The relief may also apply to assets used in the business, but only where they’re sold alongside or shortly after the business interest itself. Special care is needed here to avoid unintended restrictions.
What’s changed?
The relief continues to offer a lower tax rate than the standard 24% CGT charge for higher rate taxpayers — but that advantage is narrowing. A further increase to 18% has already been scheduled for April 2026.
If you’re considering a business sale in the next 12–24 months, the current 14% rate could still present a window of opportunity.
Our view
BADR remains useful, particularly for owner-managers and company founders. But as the tax gap closes, commercial drivers should take priority — and well-timed advice is more important than ever.
Investors’ Relief
Investors’ Relief applies to individuals who invest in unlisted trading companies and are not employed or connected with the business. It’s less well-known than BADR but operates on similar principles — with a CGT rate of 14% and a £1 million lifetime limit.
Who qualifies?
You may be eligible if:
-
You acquired new ordinary shares in an unlisted trading company on or after 17 March 2016,
-
You subscribed for the shares in cash,
-
You’ve held them for at least three years, and
-
You (and anyone connected to you) have not been an employee or director of the company during that time.
There are some exceptions for unpaid directors, but in general, this relief is aimed at passive investors rather than those involved in running the business.
What’s changed?
Investors’ Relief has seen two key changes recently:
-
The lifetime gains limit was reduced from £10 million to £1 million (from October 2024),
-
The CGT rate was increased to 14% (from April 2025), with a further rise to 18% due in April 2026.
This makes the relief less attractive than it once was — but it can still provide real value where the conditions are met.
Our view
For many investors, this relief now offers modest benefits — but if you’re holding qualifying shares, it’s worth reviewing whether you still qualify and whether early planning could help lock in tax savings.
Talk to us
We advise business owners and investors on structuring exits, accessing reliefs, and planning ahead to minimise tax. If you’re considering a disposal or want to review your eligibility for reliefs like BADR or Investors’ Relief, we’re here to help.
📩 Contact us to arrange a consultation.