Business Asset Disposal Relief – Understanding the Current Rates and Upcoming Changes

If you are planning to sell your business, shares, or partnership interest, understanding Business Asset Disposal Relief (BADR) is essential — especially with Capital Gains Tax (CGT) rates set to rise from April 2026.

What is Business Asset Disposal Relief?

BADR provides a valuable tax benefit by reducing the rate of Capital Gains Tax on qualifying disposals. It applies to the sale of:

• A business or part of a business

• Shares in a trading company

• An individual’s interest in a trading partnership

  
  

Current Rates

For the 2025–26 tax year, the BADR rate is 14% on qualifying gains. However, from 6 April 2026, this rate is due to increase to 18%, resulting in a higher CGT liability for disposals made after this date.

Lifetime Limit

The lifetime limit for claiming BADR remains at £1 million. This means individuals can claim the relief multiple times, provided their total qualifying gains do not exceed this cap.

Changes to Investors’ Relief

From 30 October 2024, the lifetime limit for Investors’ Relief has been reduced from £10 million to £1 million, bringing it in line with BADR. The CGT rate for Investors’ Relief is also 14% for the 2025–26 tax year, rising to 18% from April 2026.

Why This Matters

These rate increases and changes in thresholds could have a significant impact on business owners and investors considering a sale or restructuring. Timing your disposal before April 2026 could result in substantial tax savings.

Additionally, the Autumn Budget may introduce further reforms that could affect the availability or generosity of these reliefs, making it even more important to plan ahead.

How We Can Help

At Pandey & Co, we help business owners and investors navigate the complex rules around Capital Gains Tax, ensuring that transactions are structured as efficiently as possible.

If you are considering selling your business or shares, or would like to understand how these changes could affect you, get in touch with our tax specialists today for tailored advice.