Business Asset Disposal Relief 2026/27: The Rate Rise to 18% Explained
Business Asset Disposal Relief rose from 14% to 18% on 6 April 2026, still well below the standard 24% Capital Gains Tax rate on business sales. Worked example on a £500,000 gain, with the £1m lifetime limit.
A relief that has been shrinking, not disappearing
Business Asset Disposal Relief (BADR, formerly known as Entrepreneurs' Relief) gives a reduced Capital Gains Tax rate to people selling all or part of a qualifying business, partnership share, or substantial shareholding in their own trading company. The rate has been rising in stages: from 10% before April 2025, to 14% for 2025/26, and now to 18% from 6 April 2026.
Capital Gains Tax Calculator
Calculate Capital Gains Tax on property, shares and other assets for 2025/26.
Open Capital Gains Tax calculatorThe current rate and lifetime limit
| Rate | Lifetime limit | |
|---|---|---|
| Before April 2025 | 10% | £1,000,000 |
| 2025/26 | 14% | £1,000,000 |
| 2026/27 | 18% | £1,000,000 |
| Standard rate (comparison) | 24% (higher rate) | n/a |
The £1,000,000 lifetime limit has not changed through these rate rises — it's a cumulative limit across an individual's entire life, potentially spanning multiple qualifying business sales, not a per-transaction or per-year limit.
Worked example: selling a business for a £500,000 gain
A sole trader sells their business, realising a chargeable gain of £500,000, all of which qualifies for BADR (having met the ownership and trading conditions for the required 2-year period), and has not previously used any of their BADR lifetime limit.
- Annual exempt amount (2026/27): £3,000
- Taxable gain: £500,000 − £3,000 = £497,000
- Tax at 2026/27 BADR rate (18%): £497,000 × 18% = £89,460
For comparison, at the 2025/26 rate (14%): £497,000 × 14% = £69,580 — meaning the rate rise alone adds £19,880 to this specific sale compared with completing it a year earlier.
For comparison, at the standard 24% rate (no BADR): £497,000 × 24% = £119,280 — so even at the higher 18% BADR rate, this seller still saves £29,820 compared with the standard higher rate.
Who qualifies
BADR broadly applies to:
- Sole traders selling all or part of their business
- Partners disposing of their share of a partnership's assets
- Company shareholders who are also officers or employees, holding at least 5% of both the ordinary share capital and voting rights (the "personal company" test)
In each case, the qualifying conditions generally need to have been met for at least 2 years ending with the date of disposal.
self-employed-tax-ukStill worthwhile, but the margin has narrowed
At 18%, BADR remains meaningfully below the standard 24% rate that would otherwise apply to a higher or additional rate taxpayer's business disposal gain — but the gap has narrowed considerably from the 14-percentage-point advantage BADR offered when it was 10% (versus a lower standard rate at the time). Business owners planning an exit should factor the current 18% rate, and the possibility of further changes, into their timing and lifetime limit planning.
Bottom line
Business Asset Disposal Relief still offers a real tax saving on qualifying business sales in 2026/27, even after rising to 18% — but the relief has become less generous in consecutive Budgets, and the £1,000,000 lifetime limit means anyone planning multiple business sales over their career needs to track how much of that limit they've already used.
Sources
- GOV.UK: Business Asset Disposal Relief
- GOV.UK: Capital Gains Tax rates
Frequently asked questions
What is the Business Asset Disposal Relief rate in 2026/27?
Business Asset Disposal Relief (BADR) rose to 18% from 6 April 2026, up from 14% in 2025/26 and 10% before April 2025. It remains well below the standard 24% Capital Gains Tax rate that otherwise applies to higher-rate taxpayers on business disposals.
What is the lifetime limit for Business Asset Disposal Relief?
The lifetime limit is £1,000,000 of qualifying gains per individual — once you've used £1,000,000 of BADR across your lifetime (potentially across multiple business sales), any further qualifying gains are taxed at the standard Capital Gains Tax rates rather than the BADR rate.
Who qualifies for Business Asset Disposal Relief?
Broadly, sole traders selling all or part of their business, partners selling their share of a partnership, and company shareholders who are also officers or employees holding at least 5% of the shares and voting rights, provided the relevant qualifying conditions have been met for at least 2 years before the sale.
Has the BADR rate changed more than once recently?
Yes — it rose from 10% to 14% from 6 April 2025, and then from 14% to 18% from 6 April 2026, meaning the rate has risen twice in consecutive tax years as part of a phased increase announced at the Autumn 2024 Budget.
Is BADR still worthwhile compared with standard Capital Gains Tax rates?
Yes, generally — at 18%, BADR remains 6 percentage points below the standard 24% higher rate on residential-property-adjacent gains and other chargeable assets for higher and additional rate taxpayers, so it continues to offer a meaningful saving on qualifying business disposals, even though the gap has narrowed from previous years.
Does the annual exempt amount apply on top of BADR?
Yes — the £3,000 annual exempt amount for 2026/27 is deducted from total gains before the BADR rate (or standard rates) is applied to the remainder, in the same way it applies to any other capital gain.
Try the calculators
Related reading
Divorce With a Family Business: Valuation and Tax Traps in 2026/27
How a family business is valued and divided on divorce, and the Capital Gains Tax and Business Asset Disposal Relief pitfalls of transferring or selling shares as part of a settlement in 2026/27.
Selling at Vintage and Collectables Fairs: Tax Rules for 2026/27
Regular stallholders at vintage, antiques and collectables fairs are usually running a taxable trade, not a hobby. How Self Assessment, the trading allowance and Capital Gains Tax on personal items interact in 2026/27.
UK Self Assessment From Scratch — Part 7: Making Tax Digital for Income Tax
Making Tax Digital for Income Tax (MTD ITSA) starts April 2026 for £50k+ self-employed and landlords. Here's what it means, when it applies to you, the software requirements and how it changes Self Assessment forever.