What is the Business Asset Disposal Relief rate in 2026/27?

Full answer

Business Asset Disposal Relief (formerly Entrepreneurs' Relief) has been phased toward standard CGT rates over recent years, and from 6 April 2026 the rate rose again to 18%, meaning the relief now offers no discount at all compared with the standard basic-rate CGT rate, though it still matters for the lifetime limit and how the rate compares with the 24% higher rate. **The rate progression** BADR was 10% for many years, rose to 14% for disposals in the 2025/26 tax year, and increased again to 18% from 6 April 2026 -- aligning it with the standard residential/other assets basic rate of CGT, meaning the main remaining benefit of BADR by 2026/27 is guaranteeing the lower 18% rate on qualifying gains up to £1 million, rather than risking the full gain being taxed at the 24% higher CGT rate. **The £1 million lifetime limit** BADR applies to a cumulative lifetime limit of £1 million of qualifying gains -- once you have used this limit (across one or multiple qualifying disposals over your lifetime), any further qualifying gains are taxed at standard CGT rates rather than the BADR rate. **Qualifying conditions** To qualify, you generally need to have owned the business (or shares in a personal trading company) for at least two years before disposal, and if disposing of company shares, you must be an employee or officer of the company holding at least 5% of the shares and voting rights, among other conditions -- the rules are detailed and it is worth professional advice before relying on BADR treatment. **Worked example** A business owner sells their company for a gain of £600,000, all qualifying for BADR. Tax due: £600,000 × 18% = £108,000. Without BADR, if they were a higher-rate taxpayer, the same gain (after the £3,000 annual exemption) would be taxed at 24%, producing a higher bill of roughly £143,280 -- so BADR still provides a meaningful saving compared with the higher standard rate, even though it now matches the basic rate. **Comparison table for gains above £50,270 taxable income** Without BADR (higher rate CGT): 24%. With BADR (up to £1m lifetime): 18%. The gap has narrowed considerably from the historic 10% BADR rate, but a 6 percentage point saving remains meaningful on large business disposals. **Practical tip** If you are planning a business sale and have not used your full £1 million BADR lifetime limit, structuring the sale (and confirming all qualifying conditions are met well in advance, including the two-year ownership test) with professional tax advice can still produce a meaningful saving compared with standard higher-rate CGT treatment.

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