What is Business Asset Disposal Relief (BADR)? UK Definition 2026/27
Quick Answer
Reduced 14% Capital Gains Tax rate when selling qualifying business assets.
Definition of Business Asset Disposal Relief (BADR)
Business Asset Disposal Relief (BADR), formerly Entrepreneurs' Relief, provides a reduced Capital Gains Tax rate of 14% (compared to standard 24%) when you sell qualifying business assets. The lifetime limit is £1 million of qualifying gains.
To qualify for shares, you must have owned at least 5% of the company and been an officer or employee for at least 2 years before sale. For sole traders or partnerships, you must have owned the business for at least 2 years.
The relief applies to: whole or part of a sole trader or partnership business, shares in a trading company where you meet the 5% and employment tests, and assets used in a business you've already sold or closed.
Business Asset Disposal Relief (BADR) — Key Facts for 2026/27
| BADR Rate 2026/27 | 14% |
| Standard CGT Rate | 18%/24% |
| Lifetime Limit | £1,000,000 |
| Minimum Ownership | 5% shares + 2 years |
How Business Asset Disposal Relief (BADR) Works — Example
- 1Sale of 10% shareholding: £500,000
- 2Original cost: £50,000
- 3Capital gain: £450,000
- 4With BADR (14%): £450,000 × 14% = £63,000 CGT
- 5Without BADR (24%): £450,000 × 24% = £108,000 CGT
- 6BADR saving: £45,000
How Business Asset Disposal Relief (BADR) Affects Your Tax
BADR saves 10% CGT on qualifying gains, a significant benefit when exiting a business. The £1m lifetime limit means you can save up to £100,000 over your lifetime. Plan business exits carefully to ensure you meet the qualifying conditions - losing a few percentage points of ownership or leaving the business too early can disqualify you.
Official HMRC Guidance on Business Asset Disposal Relief (BADR)
For official guidance, refer to HMRC's documentation. Tax rules can change, so always verify current rates and thresholds on gov.uk.
HMRC: Business Asset Disposal ReliefFrequently Asked Questions about Business Asset Disposal Relief (BADR)
Related Tax Terms
Accuracy Note
This information is for guidance only and is based on 2026/27 tax year rates. Tax rules are complex and your circumstances may differ. For personal advice, consult a qualified accountant or tax adviser.