Business Asset Disposal Relief (BADR) formerly known as Entrepreneurs’ Relief is a UK tax relief that allows eligible business owners to pay a reduced 10% Capital Gains Tax (CGT) on qualifying gains when selling all or part of their business.
Current Benefits (as of 2024)
f you qualify for BADR, you can:
- Pay just 10% CGT on up to £1 million of lifetime gains.
- Potentially save up to £100,000 in tax compared to the standard CGT rate of 20%.
Eligibility criteria include:
- Being a sole trader, business partner, or shareholder in a personal company.
- Owning the business (or shares) for at least 2 years.
- Holding 5% or more of shares and voting rights if disposing of company shares.
- Being an employee or office holder of the company.
Note: The £1 million limit is lifetime, not per business or transaction, and applies per individual so spouses may both claim it if structured appropriately.
Proposed Changes in 2025 (Unconfirmed)
While there are no confirmed legislative changes to BADR as of now, the following potential changes have been discussed by policy groups and tax commentators:
1. Abolishing BADR entirely
Some experts argue the relief doesn’t encourage entrepreneurship as intended, and may be removed.
2. Reducing the lifetime allowance
The allowance was already cut from £10 million to £1 million in 2020. There is speculation it could drop further.
3. Tightening eligibility
Potential changes may include:
- Increasing the ownership period from 2 to 5 years.
- Introducing more conditions around shareholdings or business involvement.
- Restricting access for certain industries or business types.
⚠️ Important: These are only proposed or speculated changes. No official updates have been confirmed by HMRC or the Treasury as of March 2025.
Why It Matters
If you’re considering a sale or exit, it may be wise to:
- Review your plans now with your accountant.
- Take advantage of BADR while it remains available in its current form.
- Structure your exit to optimise your tax position.
| Feature | Current (2024) Position |
| CGT Rate under BADR | 10% |
| Lifetime Gains Limit | £1 million |
| Ownership Period | 2 years |
| Applies To | Sole traders, partners, shareholders (5%+) |
| Confirmed 2025 Changes? | None confirmed as of now |
Disclaimer
This guide is for general informational purposes only. It does not constitute financial or tax advice, and policies are subject to change. You should consult a qualified accountant or tax adviser for advice specific to your situation.
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