Answers · UK 2025/26
What is the Business Asset Disposal Relief (BADR) rate after April 2025?
From 6 April 2025, the BADR rate increased from 10% to 18% CGT, matching the lower residential property CGT rate. The GBP 1,000,000 lifetime limit remains unchanged. For gains above the lifetime limit, standard CGT rates of 18% or 24% apply.
Full answer
Business Asset Disposal Relief (BADR) -- formerly Entrepreneurs' Relief -- provides a reduced CGT rate on qualifying business disposals. The rate was changed significantly in the October 2024 Budget. Rate change -- Before 6 April 2025: BADR rate was 10% -- From 6 April 2025: BADR rate is 18% The increase aligns the BADR rate with the lower of the two standard CGT rates for assets (18% for basic-rate taxpayers; 24% for higher and additional-rate taxpayers on most assets). In effect, BADR now gives a meaningful benefit only to higher and additional-rate taxpayers (saving 6p or 6p per pound respectively versus the standard 24% rate). Basic-rate taxpayers gain nothing if their gains would have fallen within the basic-rate band anyway. GBP 1,000,000 lifetime limit The lifetime limit of GBP 1,000,000 of qualifying gains remains in place. Once this limit is exhausted, subsequent gains on qualifying disposals are charged at the standard CGT rates (18% or 24%). Qualifying conditions To qualify for BADR: -- Sole trader or partner: you must have owned and operated the business for at least 2 years ending on the disposal date -- Company shareholder: you must hold at least 5% of ordinary shares and voting rights in a personal company, be an employee or officer, and have held these for at least 2 years -- The company must be a trading company (or holding company of a trading group) -- not an investment company Investors' Relief A separate relief, Investors' Relief, applies to external investors in unlisted trading companies who are not employees. The lifetime limit is GBP 10,000,000 and the rate is also now 18% following the same April 2025 change. Planning considerations With BADR now at 18%, the benefit is smaller than before. Business owners approaching the limit should review whether to accelerate a disposal if rates might rise further, or whether other structures (e.g., reinvesting into EIS/SEIS to defer CGT entirely) offer better outcomes. Given the reduced rate differential, the value of BADR-specific planning has diminished.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.