Key changes to Business Asset Disposal Relief (BADR) from 6 April 2026
Business Asset Disposal Relief is a Capital Gains Tax (CGT) relief that reduces the rate of tax paid on the disposal of qualifying business assets.
Introduced as Entrepreneurs’ Relief in 2008 it became known as Business Asset Disposal Relief in April 2024 and it has been the cornerstone of tax-efficient business disposals, offering business owners a reduced CGT rate on qualifying gains.
From 6 April 2026, the tax landscape for disposals qualifying for Business Asset Disposal Relief will change significantly.
In this article, Georges Daubney, Tax Partner at Cowgills explains how Business Asset Disposal Relief works, the eligibility criteria and what’s changing.
How does BADR work?
BADR is available for certain business disposals, and has the effect of charging the first £1 million of gains qualifying for the relief at an effective rate of 14% for 2025/26.
BADR: What is changing after 5 April 2026?
For disposals made on or after 6 April 2026, the rate of CGT for BADR rises from 14% to 18%.
Lifetime Limit
It’s also worth noting that you can only claim BADR up to a lifetime limit, which is currently set to and remaining at £1 million. There are no limits about how many times you use the relief though.
What are the conditions for BADR?
Strict eligibility conditions apply
The relief is available to individuals and trusts making a material disposal of business assets.
It can apply to disposals of:
- A sole trade and its assets
- Partnership interests and assets
- Shares in your own company
- Business assets held by a trust
A disposal of shares in a company is a material disposal, where throughout a qualifying period of 24 months, ending with disposal:
- The company is the individual’s ‘personal company’;
- That company is a trading company or holding company of a trading group; and
- The individual is an offer or employee of the company or one or more companies in the same trading group.
It is also not unusual for an asset used in a business to be held outside of that business. A common example is the premises from which a company carries on its trade. BADR may be available on the disposal of such an asset under the associated disposals rules where the individual has made a material disposal as part of their withdrawal from the business.
We can assist you in reviewing your eligibility for BADR, and we recommend doing this on a regular basis, even if a business exit isn’t currently planned. Ensuring everything is structured correctly now will help preserve your options for the future.
Final thoughts
From 6 April 2026, the Business Asset Disposal Relief rate will rise to 18%, reducing the level of tax advantage available. While the relief will still offer meaningful benefits, it will be less generous than in previous years.
There are a number of alternative routes worth considering. These might include family succession planning, transferring ownership to an Employee Ownership Trust or structuring a phased disposal. Each option brings its own tax considerations and wider commercial implications.
If you’re thinking about a disposal and would like to explore the most suitable approach, speak to your usual Cowgills contact or get in touch via our website. And follow our LinkedIn page to get our latest company updates.
