What Is Business Asset Disposal Relief (BADR) and How Much Can It Save in 2026?
BADR caps CGT at 18% on the first £1m of qualifying lifetime gains from selling a business. As at August 2026, it saves higher-rate taxpayers up to £60,000 — but nothing for basic-rate taxpayers.
Short answer: Business Asset Disposal Relief (BADR) is a UK capital gains tax relief that caps the CGT rate at 18% on the first £1 million of qualifying lifetime gains from selling a business or shares. As at 9 August 2026, BADR saves higher and additional-rate taxpayers 6% (the 24% headline rate less 18%) — a maximum saving of £60,000 — but offers nothing to basic-rate taxpayers.
What BADR does
Without BADR, gains on selling a business are taxed at the main CGT rates of 18% (basic) or 24% (higher/additional). BADR applies a single 18% rate to qualifying gains up to a £1 million lifetime limit. The relief was formerly known as Entrepreneurs' Relief.
The rate has increased
| Tax year | BADR rate | Maximum saving vs 24% |
|---|---|---|
| Up to 5 April 2025 | 10% | £140,000 |
| 2025-26 | 14% | £100,000 |
| 2026-27 onwards | 18% | £60,000 |
So BADR is far less generous than it was — but it still reduces the top rate from 24% to 18% on up to £1 million of gains.
Who qualifies for BADR?
There are two main routes:
1. Material disposal of business assets — selling all or part of a business you have operated as a sole trader or partner, or assets used in it, for at least two years.
2. Disposal of shares in a personal company — selling shares in a trading company where, for at least two years before disposal, you have been an officer or employee and held at least 5% of the ordinary share capital and 5% of voting rights.
EMI shares — one year, not two
If you hold shares acquired through an Enterprise Management Incentives (EMI) option and have exercised at least one year before sale, the two-year qualifying period is reduced to one year and the personal company conditions are deemed met. This makes EMI the most tax-efficient route to a qualifying exit.
Practical example
A founder sells his trading company shares for £2 million with a £1.5 million gain in 2026-27, qualifying for BADR:
- £3,000 annual exemption (0%)
- £1,000,000 at 18% (BADR) = £180,000
- £497,000 at 24% = £119,280
- Total CGT: approximately £299,280
Had he sold before 6 April 2025 (BADR at 10%), the tax would have been roughly £150,000 — the phased increases have added nearly £150,000.
Legislation
BADR is in TCGA 1992, sections 169I–169R. The staged rate increases (10% → 14% → 18%) were announced at the October 2024 Budget. The £1 million lifetime limit was set in 2020. EMI treatment is at section 169IA.
How Newshams can help
Newshams Tax Advisers advises business owners on BADR qualification, EMI planning, and exit structuring to protect after-tax proceeds. Contact us on +44 (0) 800 211 8657 or enquiries@newshams.com.
Frequently Asked Questions
What is corporate tax restructuring?+
Corporate tax restructuring involves reorganising a company's group structure to achieve tax efficiency, which can include mergers, demergers, share-for-share exchanges, and asset transfers. Specialist advice is essential to ensure compliance and maximise available reliefs.
Do I need HMRC clearance for a corporate transaction?+
Many corporate restructurings require statutory clearance from HMRC to confirm that reliefs such as substantial shareholding exemption or share-for-share exchange relief apply. A Chartered Tax Adviser can prepare and submit the clearance application.
How can a Chartered Tax Adviser help with a business sale?+
A Chartered Tax Adviser can structure the sale to minimise tax liability, identify available reliefs, prepare HMRC clearances, and ensure compliance with all tax obligations throughout the transaction.
Simon Newsham CTA
Chartered Tax Adviser — Founder, Newshams Tax Advisers
Simon Newsham is a Chartered Tax Adviser (CTA) with over 30 years' experience advising businesses, high net worth individuals, law firms and accountancy practices on complex UK tax matters. He has been advising clients since 1995 and is a member of the Chartered Institute of Taxation.
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