Business Asset Disposal Relief
Selling your business can bring a substantial tax bill. We help you assess whether you qualify for Business Asset Disposal Relief and identify steps to protect your eligibility.
Business Asset Disposal Relief
Business Asset Disposal Relief (BADR), previously known as Entrepreneurs’ Relief, can reduce the Capital Gains Tax payable when you sell all or part of your business.
Although the relief has become less generous in recent years, it is still valuable. From April 2026, qualifying gains are taxed at 18% rather than the usual 24% for higher-rate taxpayers, up to a lifetime limit of £1 million. That could mean a tax saving of £60,000.
Business Asset Disposal Relief conditions
For owners of trading companies, qualifying for BADR is often relatively straightforward. Generally, you must have been a director or employee and held at least 5% of the company’s shares and voting rights for two years before the sale. There are also requirements concerning your entitlement to profits, assets or sale proceeds. Different conditions apply to sole traders and partnerships.
Where you sell shares in a company, the relief applies to qualifying gains made by you as a shareholder, rather than gains made by the company itself.
Can retaining profits affect Business Asset Disposal Relief?
One area that can cause problems is the treatment of profits retained within the company. Holding cash is not necessarily an issue, but using it to build up substantial investments in property, shares or other assets could affect the company’s status as a trading company and put the relief at risk.
How do you claim Business Asset Disposal Relief?
BADR must be claimed, usually through your Self Assessment tax return. The deadline is 31st January, one year after the normal online filing deadline for the tax year in which the disposal took place. For example, a disposal in the 2026/27 tax year must be claimed by 31st January 2029.
Business Asset Disposal Relief Advice
If you are planning to sell your business, it is worth reviewing your eligibility well in advance. Problems with shareholdings, company structure or investment activities may be difficult to resolve once a sale is underway.
At Tax Innovations, we can review your circumstances, advise on the availability of Business Asset Disposal Relief and help you make a claim. We can also advise on how decisions about retaining and investing profits might affect your eligibility in the future.
Contact us to discuss your plans.
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