- BADR cuts Capital Gains Tax to 18% on qualifying gains from 6 April 2026
- You can claim relief on up to £1 million of gains over your lifetime
- Claims for 2025 to 2026 disposals must be made by 31 January 2028
Business asset disposal relief (entrepreneurs’ relief) lets you pay 18% Capital Gains Tax on qualifying gains when you sell or close your business, up to £1 million over your lifetime. If you run a company, a limited company accountant can check you qualify before you sign anything.
This guide covers how the relief works, who can claim it and what the 2026 rate means for your exit.
What is entrepreneurs’ tax relief?
Entrepreneurs’ tax relief is the old name for Business Asset Disposal Relief (BADR). It reduces the Capital Gains Tax you pay when you sell all or part of your business, or shares in a trading company you work for.
It’s a personal relief for individuals and trustees. Your company can’t claim it on assets the company sells itself.
How does entrepreneurs’ tax relief work?
Entrepreneurs’ relief was introduced in 2008 and renamed Business Asset Disposal Relief in 2020. Qualifying gains are taxed at a reduced rate, and the BADR rate has gone up twice since April 2025.
| Date of disposal | BADR rate |
|---|---|
| On or before 5 April 2025 | 10% |
| 6 April 2025 to 5 April 2026 | 14% |
| From 6 April 2026 | 18% |
You can claim relief on up to £1 million of qualifying gains over your lifetime. Anything above the lifetime limit is taxed at the normal Capital Gains Tax rates.
How much does BADR save you?
From 6 April 2026, the 18% BADR rate is the same as the basic rate of Capital Gains Tax. The saving comes on gains that would otherwise be taxed at the 24% higher rate.
That’s a 6 percentage point cut, worth up to £60,000 if you use the full £1 million lifetime limit.
What qualifies as a disposal?
A disposal can be the sale of all or part of your business, or closing it down. It can also be the sale of shares or securities, or of assets you let the business use.
If you’re closing a limited company, timing matters. Sole traders and partners who close must dispose of their business assets within 3 years, and shareholders can still qualify if they sell within 3 years of the company stopping trading.
If the company sits dormant in the meantime, it still has to file dormant company accounts with Companies House.
Who can claim entrepreneurs’ tax relief?
Not every business owner qualifies. The conditions depend on what you’re selling, and most of them must apply for at least 2 years up to the date you sell.
If you’re a sole trader or business partner
- You’ve been a sole trader or business partner for at least 2 years.
- You’ve owned the business for at least 2 years.
If you’re selling shares or securities
For at least 2 years up to the sale:
- You’re an employee or office holder of the company, or of a company in the same group.
- The company’s main activity is trading rather than investment, or it’s the holding company of a trading group.
- It’s your “personal company”, meaning you hold at least 5% of the shares and 5% of the voting rights.
- You’re entitled to at least 5% of distributable profits and assets on a winding up, or 5% of the proceeds if the company is sold.
Shares from an Enterprise Management Incentive (EMI) scheme follow different rules. You must have bought them after 5 April 2013 and been given the option at least 2 years before you sell.
These are the headline conditions, and HMRC applies more detailed rules in specific cases. A tax accountant can check your position before you claim business asset disposal relief.
Has entrepreneurs’ relief been scrapped?
No. Entrepreneurs’ relief is still available as BADR, but it’s less generous than it was.
The Autumn Budget 2024 kept the relief and raised the BADR rate in two steps, from 10% to 14% in April 2025 and then to 18% in April 2026. The £1 million lifetime limit hasn’t changed.
What does the higher BADR rate mean for business owners?
Because the BADR rate now matches the basic rate of Capital Gains Tax, the relief only saves tax on gains that would otherwise fall into the 24% band. On a £500,000 qualifying gain for a higher-rate taxpayer, that’s £90,000 of tax at 18% against £120,000 at 24%, before any allowances.
If you’re planning an exit, model the figures early. If your company sells an asset itself, the gain falls under Corporation Tax instead, which our guide to tax when selling a business asset covers.
Are there alternatives to BADR?
For most owner-managers selling a trading company, BADR is still the main relief on offer. Other routes worth knowing about:
- Taking profits out before you sell, through a mix of salary and dividends. Our guide to tax-efficient ways to take money out explains the options.
- Selling to an employee ownership trust (EOT). Since 26 November 2025, only 50% of the gain is relieved and you can’t claim BADR alongside it.
- Investors’ Relief, for outside investors who don’t work in the company. Its rates now match the BADR rate.
Which route suits you comes down to your income, your timeline and who’s buying.
How Sleek helps with business asset disposal relief (entrepreneurs’ relief)
Business asset disposal relief (entrepreneurs’ relief) only cuts the tax on your exit if every condition holds on the day you sell, and one missed condition pushes your gain back to the full Capital Gains Tax rate. With Sleek’s Limited Company Accountant service, a dedicated accountant checks the 2-year conditions, works out your gain against your other options and makes the claim through your Self Assessment return.
AI does the number-crunching, your accountant reviews every figure and you can see each step in your portal. If you’d rather do it yourself, HMRC’s HS275 helpsheet sets out the rules in full, and our tax FAQs cover wider company tax questions.
Get your BADR claim right with a Sleek accountant
FAQs on business asset disposal relief (entrepreneurs' relief)
If I'm already a Sleek accounting client, will my accountant handle my business asset disposal relief claim?
Yes. Every Sleek accounting service covers a BADR claim on request, so tell your accountant as soon as a sale or closure is on the cards. They’ll check the conditions, calculate the gain and make the claim for you, reviewing every figure before it goes to HMRC.
What's the deadline to claim business asset disposal relief after I sell or close my business?
You have until the second 31 January after the end of the tax year in which you sold or closed your business. For a disposal in the 2025 to 2026 tax year, that’s 31 January 2028. The relief isn’t applied automatically, so you claim it on your Self Assessment return or in Section A of the HS275 helpsheet.
When do I have to pay the Capital Gains Tax on a gain that qualifies for business asset disposal relief?
You pay the tax by 31 January after the end of the tax year you made the gain in, as part of your Self Assessment bill. For a sale in the 2026 to 2027 tax year, that’s 31 January 2028. Payment falls due a year before the last date to claim the relief, so budget for the tax early.
Can I claim business asset disposal relief more than once if I sell several businesses?
Yes. There’s no limit on the number of claims you can make, but the total across all of them can’t go over £1 million of qualifying gains. If you sold assets before 11 March 2020, you may be able to claim more, and HMRC can confirm your position.
Can I still claim business asset disposal relief if new share issues take my stake below 5%?
Yes, in some cases. If your holding drops below 5% because the company issued more shares, you can elect to be treated as if you’d sold and re-bought your shares just before the new issue, which creates a gain you can claim relief on. You can also elect to postpone the tax on that gain until you actually sell, using the additional information section of the Capital Gains summary on your tax return.
Can I use my £3,000 Capital Gains Tax allowance as well as business asset disposal relief?
Yes. The tax-free allowance is £3,000 for the 2026 to 2027 tax year, and HMRC lets you set it against the gains charged at your highest rate. If you have other gains taxed at 24%, use the allowance on those first, because your BADR gains are taxed at 18% either way.
Can I claim business asset disposal relief on a property I own personally and let my company use?
Yes, if you sell it as part of selling your stake. You must also sell at least 5% of your shares in your personal company, or of your share in a business partnership. The company or partnership must have used the property for at least one year up to the date you sold your business or shares, or the date the business closed.
