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How Business Asset Disposal Relief Rates Change in April 2025
Business owners, shareholders and partners considering a disposal of qualifying business assets and relying on Business Asset Disposal Relief (BADR).
The Autumn 2024 Budget measures confirming increases to the BADR Capital Gains Tax rate from April 2025 and April 2026, together with the continued £1 million lifetime limit and reference to anti-forestalling rules.
The rate applying to qualifying disposals will increase from 10% to 14% from 6 April 2025 and to 18% from 6 April 2026. Timing of disposal directly affects the tax payable.
Current Position up to 5 April 2025
- Qualifying disposals are taxed at 10%.
- The £1 million lifetime limit remains in place.
The 10% rate applies to qualifying BADR disposals completed on or before 5 April 2025.
Rate Increase from 6 April 2025
- The BADR rate increases from 10% to 14%.
- The increase applies to disposals from 6 April 2025.
This represents a four percentage point increase in the rate of Capital Gains Tax on qualifying disposals.
Further Increase from 6 April 2026
- The BADR rate increases from 14% to 18%.
- The change takes effect from 6 April 2026.
From this date, qualifying disposals will be taxed at 18% within the lifetime limit.
Lifetime Limit
- The £1 million lifetime cap for Business Asset Disposal Relief remains unchanged.
- Qualifying gains within this limit benefit from the BADR rate applicable at the date of disposal.
The page also references the reduction of the Investors’ Relief lifetime limit and alignment of rates.
Anti-Forestalling Rules
The measures reference anti-forestalling rules.
These rules are intended to prevent arrangements designed to secure the lower 10% rate before the increase takes effect.
The effective date of disposal and applicable legislation determine which rate applies.
Practical Timing Considerations
- Disposals completed on or before 5 April 2025 are taxed at 10%.
- Disposals from 6 April 2025 are taxed at 14%.
- Disposals from 6 April 2026 are taxed at 18%.
The completion date is critical in determining the applicable rate.
Real-World Application
- A shareholder completing a qualifying share disposal before 6 April 2025 may be taxed at 10%.
- A disposal completed after 5 April 2025 but before 6 April 2026 may be taxed at 14%.
- A disposal completed from 6 April 2026 may be taxed at 18%.
The difference in rate directly affects the Capital Gains Tax payable on qualifying gains within the lifetime limit.
Risks and Considerations
- Assuming the 10% rate continues beyond 5 April 2025.
- Failing to consider the impact of anti-forestalling rules.
- Overlooking the timing of completion when planning a disposal.
The applicable rate is determined by legislation in force at the date of disposal.
Before You Proceed with a Disposal
- Confirm whether the disposal qualifies for Business Asset Disposal Relief.
- Review the applicable rate based on the expected completion date.
- Consider the effect of the rate increase on the overall tax liability.
Timing directly affects the Capital Gains Tax outcome for qualifying disposal.
Discuss Your Strategy Ahead of the Rate Increase
Upcoming changes to Business Asset Disposal Relief rates from April 2025 could materially affect the tax payable on qualifying disposals, making timing and forward planning critical. If you are considering selling shares or closing a business, understanding how revised rates interact with lifetime limits and qualifying conditions is essential. Seeking proactive capital gains tax advice London ensures you assess whether accelerating or restructuring a disposal could protect your position. Cigma Accounting, advising directors from our Kingston Upon Thames and supporting clients in Hampton Wick and Norbiton, provides structured planning based on current and forthcoming legislation.
Rate adjustments must be considered alongside shareholding tests, trading status requirements, and reporting deadlines to avoid unintended consequences. Working with an experienced tax accountant in London allows you to model scenarios before contracts are exchanged. Cigma Accounting offers technically robust, commercially focused support with physical offices across London, helping business owners respond confidently to legislative change while safeguarding after-tax proceeds.
CONCERNED ABOUT BADR RATE CHANGES FROM APRIL 2025?
Adjustments to Business Asset Disposal Relief rates could affect the net proceeds from a future business sale. Reviewing timing, eligibility, and transaction structure now can help you protect value before the new rates take effect.
Trusted guidance from London-based accountants, focused on accuracy, clarity, and compliance.
