If you are planning to sell your business, the single most important number in the deal is no longer the price. It is what you keep.
And what you keep has changed sharply. Business Asset Disposal Relief has moved from 10% to 14% to 18% in the space of two tax years — the most frequent rate change of any major UK relief in recent memory. Many owners are still modelling their exit on a figure that expired eighteen months ago.
What is the BADR rate now?
18% on qualifying gains, for disposals made on or after 6 April 2026.
The recent history matters, because a great deal of published guidance — including some still sitting on accountants’ websites — has not caught up:
- Up to 5 April 2025: 10%
- 6 April 2025 to 5 April 2026: 14%
- From 6 April 2026: 18%
The lifetime limit is unchanged at £1 million of qualifying gains. Gains above that are taxed at the standard rates — currently 24% for higher and additional-rate taxpayers on most assets.
Investors’ Relief has been aligned with BADR: the same 14% then 18% rates, and its lifetime limit was cut from £10 million to £1 million.
What does the change actually cost?
Take an owner with a £1 million qualifying gain — a common enough figure for a successful owner-managed business.
Sold before 6 April 2025 (10%): £100,000 of CGT. Sold in 2025/26 (14%): £140,000. Sold from 6 April 2026 (18%): £180,000.
That is £80,000 more than the same business would have cost to sell two years earlier. Nothing about the business changed. Only the date did.
The relief is still worth having — 18% remains well below the 24% standard rate — but it can no longer be treated as a rounding error in your exit model.
Do I still qualify for BADR?
The conditions have not changed, and they are stricter than most owners assume. For a disposal of shares, throughout the 24 months immediately before the sale you must generally have:
- held at least 5% of the ordinary share capital and voting rights;
- been entitled to at least 5% of distributable profits and of net assets on a winding up (or 5% of proceeds on a sale of the whole company); and
- been an officer or employee of the company.
That two-year clock is the point people miss. If you are contemplating a share reorganisation, bringing in an investor, or stepping back from your role, you can inadvertently reset or break the qualifying period. Do those things in the wrong order and you can lose the relief entirely.
Special rules apply to shares acquired through EMI options, and to dilution.
Can I still plan around this?
Yes — but the planning is about structure and timing, not about racing to complete.
Check your qualifying period now, not when a buyer appears. The 24-month test is the one that most often turns out to be broken.
Use both spouses’ lifetime limits where a genuine, commercially real shareholding can be established well in advance. A transfer made on the eve of a sale invites challenge.
Consider what falls outside BADR. Gains above the £1m lifetime limit attract the standard rate, which changes the calculus on how — and over how long — you sell.
Be aware of anti-forestalling rules. Contracts entered into before a rate change but completed afterwards do not automatically get the old rate. Arrangements designed to lock in a lower rate are specifically targeted.
And the unglamorous truth: the biggest lever on your net proceeds is still the price, and the biggest lever on the price is how well prepared the business is. Owner dependence, customer concentration and messy accounts cost far more than four percentage points of CGT.
Frequently asked questions
What is the Business Asset Disposal Relief rate for 2026/27?
18% on qualifying gains, for disposals made on or after 6 April 2026. This is up from 14% in 2025/26, and from 10% for disposals up to 5 April 2025. The lifetime limit remains £1 million of qualifying gains.
Has the BADR lifetime limit changed?
No — it remains £1 million of qualifying gains across your lifetime. It is cumulative, so if you have previously claimed on £300,000, you have £700,000 of allowance left. Gains above the limit are taxed at the standard CGT rates.
I sold my business in 2025/26 — which rate applies?
14%, the rate that applied to qualifying disposals between 6 April 2025 and 5 April 2026. The 18% rate applies only to disposals on or after 6 April 2026. The relevant date is generally the date of the contract, not completion — which is exactly why anti-forestalling rules exist.
Could I lose BADR without realising?
Easily. The conditions must be met throughout the 24 months before disposal — a 5% shareholding and voting rights, 5% economic entitlement, and being an officer or employee. A share reorganisation, an incoming investor diluting you, or stepping back from your role can break the clock. Check before you act, not after.