Business Asset Disposal Relief 2026: Why the Rate Now Matters as Much as the Relief Itself

Business Asset Disposal Relief (BADR) — still widely known by its old name, Entrepreneurs’ Relief — cuts the rate of Capital Gains Tax on a qualifying disposal. That covers a trading business, shares in a personal trading company, or an associated disposal of business assets. For years its value lay in a flat 10% rate. That’s no longer the whole story: the BADR rate has changed twice in two years, and by 2026 it’s doing considerably less heavy lifting than most owner-managers assume.

How the Business Asset Disposal Relief rate has changed

The rate moved in stages: 10% for disposals up to 5 April 2025, 14% from 6 April 2025 to 5 April 2026, and 18% from 6 April 2026 — the rate now in force. The lifetime limit on gains qualifying for the relief remains £1 million per individual — it hasn’t moved since March 2020. At 18% rather than 10%, the maximum saving Business Asset Disposal Relief now delivers is £60,000, not £100,000. That’s still meaningful, but a smaller cushion than the one many owners still have in their heads from when they last checked.

The qualifying conditions are unforgiving

Two mechanical points matter more than they used to at a narrower rate gap. First, the business must have been trading and the individual must have held at least 5% of ordinary share capital and voting rights, and been an officer or employee, throughout a two-year qualifying period ending with the disposal. Falling short on any limb for even part of that period — a shareholding diluted by a funding round, an employment contract that lapsed — can lose the relief entirely, not partially. Second, where a sale involves deferred or earn-out consideration, the earn-out structure decides two things: when the disposal counts as happening, and whether later tranches qualify for BADR at all. Owners fix that structure once, at completion, and rarely get a chance to revisit it.

What this means for planning a sale

With the lifetime limit static and the rate up 80% in under two years, the planning question has shifted. It’s no longer “does this qualify” — it’s “when, precisely, does the two-year clock start, and does the deal structure protect what owners have built.” Reviewing shareholding structure and qualifying status well before a transaction is now the more valuable exercise than it was when the rate sat at 10%.

Frequently Asked Questions

Is Business Asset Disposal Relief the same as Entrepreneurs’ Relief? Yes. HMRC renamed Entrepreneurs’ Relief as Business Asset Disposal Relief in April 2020 and cut the lifetime limit from £10 million to £1 million at the same time. The underlying mechanics are the same relief under a new name.

What is the current Business Asset Disposal Relief rate in 2026? 18%, applying to disposals from 6 April 2026 onwards, up from 14% in the 2025/26 tax year and 10% before that.

How much can I save with BADR? Up to £60,000 per individual — the £1 million lifetime limit at 18% instead of the standard higher CGT rate — as long as you meet all qualifying conditions throughout the two-year holding period.

How H&Hendricks Can Help

H&Hendricks’ Preparing for Sale service reviews Business Asset Disposal Relief qualifying status — shareholding, employment history, and deal structure — long before a transaction is underway, when there is still time to fix a gap.