Planning a Business Exit? Don’t Miss the 2026 BADR Changes
Business Asset Disposal Relief (BADR) is a valuable Capital Gains Tax (CGT) relief available to business owners on the disposal of qualifying business assets. Originally introduced in 2008 as Entrepreneurs’ Relief, and renamed BADR in April 2020, it has long supported tax-efficient business exits.
From 6 April 2026, important changes will take effect that will reduce the level of tax savings available. Below, we outline how the relief works, what is changing, and what you should consider if you are planning a disposal.
How does BADR work?
BADR reduces the rate of CGT payable on qualifying business disposals.
For the 2025/26 tax year, gains qualifying for BADR are taxed at a rate of 14%, applied to the first £1 million of lifetime qualifying gains per person.
This can result in a significant tax saving for business owners exiting their business, selling shares, or disposing of certain business assets.
What is changing from 6th April 2026?
From 6 April 2026, the CGT rate applying to BADR qualifying gains will increase:
- The rate will rise from 14% to 18%
- The £1 million lifetime limit remains unchanged
Although BADR will continue to offer a preferential rate compared to standard CGT rates, the advantage will be reduced.
Lifetime limit
Individuals can claim BADR on qualifying gains up to a lifetime limit of £1 million. There is no restriction on how many times the relief can be claimed, provided the cumulative total does not exceed this limit.
Who qualifies for BADR?
Strict eligibility criteria apply. BADR is available to individuals and certain trusts making a material disposal of business assets.
The relief may apply to disposals of:
- A sole trade and its assets
- Partnership interests and partnership assets
- Shares in your own company
- Business assets held by a trust
Share disposals – key conditions
A disposal of shares will qualify as a material disposal where, throughout a continuous 24-month qualifying period ending on the date of disposal:
- The company is the individual’s personal company (generally meaning they hold at least 5% of the shares and voting rights as well as the right to at least 5% of the proceeds of a notional share sale);
- The company is a trading company or the holding company of a trading group; and
- The individual is an officer or employee of the company (or of another company within the trading group).
Associated disposals
It is common for business owners to hold certain assets outside the company structure — for example, commercial premises personally owned but used by the company.
In some cases, BADR may also be available on the disposal of these assets under the associated disposal rules, provided the disposal forms part of the individual’s withdrawal from the business and other conditions are met.
Planning ahead
With the increase in the BADR rate from April 2026, early planning is more important than ever.
Even if a business exit is not imminent, reviewing your structure and eligibility regularly can help ensure you preserve access to the relief and avoid unexpected pitfalls.
There may also be alternative strategies worth considering, including:
- Family succession planning
- Transferring ownership to an Employee Ownership Trust (EOT)
- Structuring a phased or staged disposal
- Corporate restructuring ahead of sale
Each route has distinct tax, commercial and succession implications, and professional advice is essential to ensure the right approach is taken.
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