How much tax do I pay on a £200,000 gain with Business Asset Disposal Relief?

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Business Asset Disposal Relief (BADR), previously known as Entrepreneurs' Relief, allows a reduced rate of Capital Gains Tax on qualifying disposals of all or part of a business, shares in a personal trading company, or assets used in a business that has ceased. The BADR rate is 18% for 2026/27, having risen in stages from 10% in earlier years, and it applies up to a lifetime limit of £1,000,000 of qualifying gains per individual. On a £200,000 gain that qualifies for BADR, the £3,000 annual exempt amount is deducted first, leaving £197,000 taxable at 18%, giving £35,460 of Capital Gains Tax -- considerably less than the £47,280 that would be due at the standard 24% higher rate on the same taxable gain if BADR did not apply. Because the £1,000,000 lifetime limit is a cumulative allowance across your whole life, not an annual one, a £200,000 gain leaves £800,000 of BADR headroom for any future qualifying disposals. To qualify, you generally need to have owned the business or shares for at least two years, and for shares, held at least 5% of the ordinary share capital and voting rights, and been an employee or director of the company throughout that period. Gains above the lifetime limit, or from disposals that do not qualify, are taxed at the standard 18% or 24% rates depending on your income.

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