Business Asset Disposal Relief (BADR) offers a significant tax benefit by reducing the rate of Capital Gains Tax (CGT) on the sale of a business, shares in a trading company or an individual’s interest in a trading partnership.
On 6 April 2025, the BADR CGT rate increased from 10% to 14% for disposals made in the 2025–26 tax year. However, the rate is set to rise again from 6 April 2026, to 18%. This means that qualifying disposals made after April 2026 will be subject to a higher CGT rate once again.
The lifetime limit for claiming BADR remains at £1 million, allowing individuals to claim the relief multiple times as long as the total gains from all qualifying disposals do not exceed this threshold.
In addition to changes to BADR, there were also changes to Investors’ Relief. Since 30 October 2024, the lifetime limit for Investors' Relief has been reduced from £10 million to £1 million. The CGT rates for Investors' Relief also align with those for BADR, currently set at 14% and also rising to 18% from April 2026.
These increases in CGT rates are significant and will impact tax planning strategies for business owners and investors. It is also important to note that further changes may be announced in the forthcoming Budget that could further chip away to the benefits of this relief.
