Answers · UK 2025/26
What is Entrepreneurs' Relief -- renamed Business Asset Disposal Relief (BADR) -- in the UK?
Entrepreneurs' Relief was renamed Business Asset Disposal Relief (BADR) in 2020. It reduces CGT on qualifying business disposals. From October 2024 the rate increased to 18% (from 10%). The lifetime limit is £1,000,000 of qualifying gains. Qualifying conditions include 5% shareholding and 2 years' trading.
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Business Asset Disposal Relief (BADR), formerly known as Entrepreneurs' Relief, is a Capital Gains Tax relief that reduces the CGT rate on qualifying disposals of business assets. Key figures for 2026/27: - CGT rate under BADR: 18% (increased from 10% for disposals on or after 30 October 2024 by Autumn Budget 2024) - Lifetime allowance: £1,000,000 of qualifying gains - Compare with: standard CGT rates on other assets of 18% (basic rate) / 24% (higher rate) from October 2024 Note: The BADR rate (18%) now equals the basic rate CGT rate for other assets. The relief is therefore most valuable for higher and additional rate taxpayers who would otherwise pay 24% or higher. Qualifying conditions: For company shares, the claimant must meet all of the following for at least 2 years before disposal: 1. Own at least 5% of the ordinary share capital. 2. Hold at least 5% of the voting rights. 3. Be an employee or officer (director) of the company. 4. The company must be a trading company (or holding company of a trading group) -- not mainly investment. For sole trader or partnership business assets: - The business must have been owned and trading for at least 2 years before disposal. - The assets must be used in the business (not investment assets). The lifetime limit: - The £1,000,000 limit is cumulative across all BADR claims made during a lifetime. - Prior claims reduce future entitlement. If you have previously claimed relief on £600,000 of gains, only £400,000 remains. Planning points: - Ensure the 2-year qualifying period is met before any planned sale. - EMI (Enterprise Management Incentive) options and shares can qualify for BADR under specific rules. - Anti-avoidance rules target arrangements designed artificially to meet the 5% test.
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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.