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Business asset disposal relief (BADR) is a capital gains tax (CGT) relief that allows business owners with chargeable gains on qualifying business assets to pay CGT at a rate of 14% for disposals made on or after 6 April 2025 (10% for disposals prior to this date). This relief is available on up to £1m of capital gains for each individual over their lifetime and is available on gains arising to sole traders, partners, shareholders and trusts. Relief applies to all disposals, so BADR should be considered when succession planning involves gifting business ownership, as well as in relatively straightforward sales of a business.

The rate of BADR will increase to 18% for disposals made on or after 6 April 2026.  

Due to the general changes in CGT rates from 30 October 2024 and the increases in BADR rates from 6 April 2025 and 6 April 2026, there are general anti-forestalling rules as set out in the Conditions for business asset disposal relief guidance note along with provisions relating to share reorganisations