Business Asset Disposal Relief, long known as entrepreneurs relief, reduces the tax paid when you sell a business. It has been generous, and it is being trimmed in 2026. If you plan to sell, the timing and the rules matter, and understanding them can be worth a great deal.

What BADR is

Business Asset Disposal Relief reduces the rate of capital gains tax you pay when you sell all or part of a business, or certain shares. It exists to reward those who build and sell a trading business. It is a relief, not an exemption, and the conditions to qualify are specific.

What is changing in 2026

The rate of tax paid on qualifying gains under BADR is rising in 2026, making the relief less generous than it has been. The change is phased, so the exact rate depends on when the disposal happens. Sellers should get current figures rather than rely on older assumptions.

Who qualifies

Broadly, you must have been involved in the business as an owner or employee for a set period, and the business must be a trading one rather than an investment. The rules on shares and on company assets are detailed. Professional advice is worth taking well before a sale.

The lifetime limit

BADR applies up to a lifetime limit on the gains it covers, currently one million pounds. Gains above that are taxed at the standard rates. If you have claimed the relief before, that reduces what remains available to you.

Why timing matters

Because the rate is changing and because reliefs can be reformed, the date a sale completes can affect the tax significantly. That does not mean rushing a sale, but it does mean planning around the rules rather than discovering them afterwards.

Common traps

Traps include selling too early to qualify, holding assets that are not part of a trading business, and assuming relief applies when it does not. Another is failing to plan for the tax at all, and being surprised by a bill that could have been managed.

What to do now

If a sale is on your horizon, talk to an accountant early. Confirm whether you qualify, how the 2026 changes affect your timing, and what your lifetime limit looks like. The cost of advice is small against the tax at stake.

BADR rewards those who build businesses, but the rules reward planning even more. Understand the 2026 changes before you sell. Confirm your position with a qualified accountant. Need help with this? Azryno is a web design agency based in Colombo, Sri Lanka. We build websites, brand identities, and graphic design that work for real businesses. Get in touch at https://www.azryno.com to get started.

Sources

Sources: HMRC guidance on Business Asset Disposal Relief, formerly Entrepreneurs Relief, and its one million pound lifetime limit; GOV.UK announcements on the 2026 rate changes.