Business Asset Disposal Relief: Rates Rising to 18% in April 2026
Business Asset Disposal Relief (BADR) – formerly Entrepreneurs' Relief – is getting more expensive. The rate has already risen from 10% to 14% and will climb to 18% from April 2026. If you're selling a business, qualifying shares, or a partnership interest, the timing of your disposal now has a significant impact on your tax bill.
The rate ladder
BADR used to offer a flat 10% rate on qualifying gains up to a lifetime limit. That's changing in two steps:
| Period | BADR rate |
|---|---|
| Before 6 April 2025 | 10% |
| 6 April 2025 – 5 April 2026 | 14% |
| From 6 April 2026 | 18% |
At 18%, the BADR rate matches the standard CGT basic rate. For basic rate taxpayers, this effectively removes the relief's advantage entirely – you'll pay the same rate whether you claim BADR or not. Higher and additional rate taxpayers still benefit, since their standard CGT rate is 24%.
Who qualifies
BADR applies to disposals of all or part of a trading business, or shares in a trading company, provided you meet certain conditions for at least two years before the disposal:
- Sole traders and partnerships: you must have owned the business and it must have been trading for at least two years
- Company shares: you need at least 5% of the ordinary shares, 5% of voting rights, and 5% of distributable profits – and you must be an officer or employee of the company
- Lifetime limit: the total qualifying gains you can claim BADR on is capped at £1 million (reduced from £10 million in March 2020)
The qualifying conditions are in TCGA 1992 sections 169H–169S. HMRC's Capital Gains manual at CG64000 onwards has the detailed guidance.
Worked example
A business owner sells qualifying shares for £500,000 with a cost basis of £100,000:
- Gain: £400,000
- Annual exempt amount: £3,000
- Taxable gain: £397,000
The tax bill depends on when they complete the disposal:
| Disposal date | BADR rate | Tax on £397,000 |
|---|---|---|
| Before April 2025 | 10% | £39,700 |
| 2025-26 tax year | 14% | £55,580 |
| From April 2026 | 18% | £71,460 |
The difference between the old 10% rate and the new 18% rate is £31,760 more tax on the same gain. Even moving from 14% to 18% costs an extra £15,880.
Anti-forestalling rules
If you're thinking about bringing a disposal forward to lock in the 14% rate, be aware that HMRC has anti-forestalling provisions. Simply exchanging contracts before 6 April doesn't guarantee the lower rate – the completion date and whether conditions in the contract are genuinely met both matter.
Unconditional contracts are generally treated as disposed on the contract date. But conditional contracts – where completion depends on events like regulatory approval or due diligence – are typically treated as disposed when the condition is satisfied. If that falls after 5 April 2026, the 18% rate applies regardless of when you signed.
Common mistakes
Assuming any business sale qualifies. BADR only applies to trading businesses. If the company has substantial non-trading activities – investment property, for example – it may not qualify. The two-year trading condition must be met continuously before disposal.
Forgetting the £1 million lifetime limit. The limit is cumulative across all BADR claims you've ever made. If you claimed £600,000 of relief on a previous disposal, you only have £400,000 of lifetime allowance remaining.
Overlooking Investors' Relief. If you don't meet the BADR conditions – perhaps you hold less than 5% – Investors' Relief may apply instead. It has its own qualifying rules and a separate £10 million lifetime limit, though its rate is also increasing on the same schedule.
Confusing BADR with standard CGT rates. Higher and additional rate taxpayers pay 24% on non-BADR gains. Even at 18%, BADR still saves 6 percentage points compared to the standard rate for those taxpayers. Basic rate taxpayers, however, see no benefit from April 2026.
What this means for your calculations
Our calculator computes the gain on share disposals – including Section 104 pooling and same-day/bed-and-breakfast matching. You can upload your broker statements and get the correct gain figure for each disposal. The BADR rate itself is then applied to qualifying gains when you complete your Self Assessment – see our documentation for how the gain computation works.