What is the lifetime limit for Business Asset Disposal Relief?

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Business Asset Disposal Relief (BADR) reduces the Capital Gains Tax rate on qualifying business disposals, but the benefit is capped by a fixed lifetime limit that applies across your whole life, not per transaction or per year. **The lifetime limit** Every individual has a £1 million lifetime limit for BADR-qualifying gains. This limit is cumulative -- it counts every qualifying disposal you have ever made, added together, not a fresh allowance each tax year. Once you have claimed relief on £1 million of gains in total (whether from one large sale or several smaller ones over the years), any further qualifying gains above that cumulative total are taxed at the normal CGT rate, currently 24% for higher/additional rate taxpayers on most assets. **The rate itself has changed recently** The BADR rate has increased in stages: it was 10% up to April 2025, rose to 14% for 2025/26, and increased again to 18% from 6 April 2026. This means even within your £1 million lifetime allowance, the tax saving compared with the standard rate has shrunk considerably compared with a few years ago -- though 18% is still meaningfully lower than the standard 24% rate on qualifying gains. **What qualifies** BADR generally applies to disposals of all or part of a trading business you have owned and worked in for at least 2 years, shares in your own personal trading company (where you hold at least 5% of shares and voting rights and are an employee or director), or certain assets used in a business you are winding down. It does not apply to investment properties, passive share portfolios, or most buy-to-let disposals. **Worked example** David sells his personal trading company for a £700,000 gain in 2026/27, using BADR to pay 18% CGT = £126,000, instead of the standard 24% rate which would have been £168,000 -- a saving of £42,000. He has now used £700,000 of his £1 million lifetime limit, leaving £300,000 of headroom. Three years later he sells a second qualifying business for a £500,000 gain: only £300,000 of this second gain benefits from the 18% BADR rate (using up the rest of his lifetime limit), and the remaining £200,000 is taxed at the standard 24% rate. **Why the lifetime cap matters for planning** Because the limit is per-person and lifetime (not resettable), business owners planning a sale, especially serial entrepreneurs who may sell multiple businesses over a career, need to track how much of their £1 million allowance they have already used and consider the timing and structuring of disposals (including whether a spouse or civil partner, who has their own separate £1 million limit, might jointly own qualifying shares) well before a sale takes place.

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