Business Asset Disposal Relief at 18%: What Changed for 2026/27
How Business Asset Disposal Relief's rate rose to 18% from 6 April 2026, what it means for a business sale, and the £1 million lifetime limit.
The BADR Rate Rise, Step by Step
| Period | BADR rate | Standard higher CGT rate |
|---|---|---|
| Before 6 April 2025 | 10% | 20% (then 24% from Oct 2024) |
| 2025/26 | 14% | 24% |
| 2026/27 | 18% | 24% |
The gap between BADR and the standard rate has narrowed from 10-14 percentage points historically to just 6 percentage points for 2026/27.
Worked Example: £600,000 Qualifying Gain
| Scenario | Rate | Tax due |
|---|---|---|
| Under BADR | 18% | £108,000 |
| Without BADR (standard higher rate) | 24% | £144,000 |
| Saving from BADR | £36,000 |
This assumes the full gain sits within the individual's £1 million lifetime BADR limit and the £3,000 annual CGT exemption has already been used against other gains.
The £1 Million Lifetime Limit
| Item | 2026/27 value |
|---|---|
| BADR lifetime limit | £1,000,000 |
| BADR rate within the limit | 18% |
| Rate on gains above the limit | 18%/24% (standard CGT rates) |
The £1 million limit is cumulative across an individual's lifetime and across multiple qualifying disposals — it was cut sharply from £10 million in March 2020, so anyone who used significant relief under the old higher limit needs to check how much headroom remains.
Qualifying Conditions Checklist
- At least 2 years' ownership of the business, or of shares in a personal trading company
- At least 5% of shares and voting rights held, if disposing of company shares
- Officer or employee status of the company throughout the qualifying period
- The company must be a trading company or the holding company of a trading group, not mainly an investment business
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What is the Business Asset Disposal Relief rate in 2026/27?
18%, up from 14% in 2025/26 and 10% before April 2025 — the rate has risen in two steps as part of a phased increase, moving BADR closer to (though still below) the standard 18%/24% Capital Gains Tax rates on residential property and other assets.
What is the lifetime limit for Business Asset Disposal Relief?
£1 million in qualifying gains over a lifetime, per individual. Gains above this cumulative lifetime limit are taxed at the standard Capital Gains Tax rates rather than the BADR rate, regardless of how many separate qualifying disposals make up the total.
How much tax do I save with BADR compared with standard CGT rates in 2026/27?
With BADR now at 18% and the standard higher CGT rate at 24%, the saving is 6 percentage points per pound of gain within the £1 million lifetime limit — smaller than the gap before April 2025, when BADR sat at 10% against a 20% (then 24%) standard rate.
What are the qualifying conditions for BADR?
Broadly: you must have owned the business (or shares in a personal trading company where you hold at least 5% of shares and voting rights, and are an officer or employee) for at least 2 years before the disposal, and the business must be a trading company or group, not primarily an investment vehicle.
What's a worked example of BADR on a £600,000 gain?
At 18%, the Capital Gains Tax due is £108,000, compared with £144,000 at the standard 24% higher rate — a saving of £36,000, assuming the full £600,000 sits within the individual's £1 million lifetime BADR limit and the £3,000 annual exemption has already been used elsewhere.
Has BADR been renamed from Entrepreneurs' Relief?
Yes — the relief was renamed from Entrepreneurs' Relief to Business Asset Disposal Relief in April 2020, alongside a sharp cut to the lifetime limit (from £10 million to £1 million) at the same time. The name change didn't affect the qualifying conditions, only the limit and, since 2025, the rate.
Does BADR apply to residential property sales?
No — BADR is specifically for gains on disposing of a trading business, shares in a personal trading company, or certain business assets, not residential property. Residential property gains are taxed at the standard residential CGT rates (18%/24%), which don't benefit from BADR regardless of the seller's circumstances.
Is further change to the BADR rate expected?
The rate has already increased in stages (10% to 14% in 2025/26, then to 18% from April 2026), and further alignment with standard CGT rates has been floated in policy discussion — check the latest Budget announcements for any confirmed future changes before relying on the current 18% rate for long-term planning.
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