Entrepreneurs’ Relief was renamed Business Asset Disposal Relief (BADR) in 2020 — the rate is now 18% for disposals made on or after 6 April 2026.
Key Takeaways
- Entrepreneurs’ relief was renamed Business Asset Disposal Relief on 6 April 2020, but the mechanics and eligibility criteria are essentially unchanged.
- BADR rate is 18% for disposals made on or after 6 April 2026.
- A £1 million lifetime limit applies across all claims you ever make, with gains above that cap taxed at standard CGT rates of 18% or 24%.
- Limited company directors must hold at least 5% of ordinary share capital and voting rights throughout a two-year qualifying period ending on the date of disposal.
- The BADR claim deadline is the first anniversary of 31 January following the tax year of disposal, submitted through Self Assessment.
- Spouses and civil partners each have their own £1 million limit.
- Property rental businesses, passive investments, and single-asset disposals don’t qualify for the relief.
Table of contents
1. What entrepreneurs’ relief is now called
If you’ve searched for ‘entrepreneurs’ relief’, you’re looking for the right tax break under its old name.
The relief was renamed Business Asset Disposal Relief (BADR) on 6 April 2020, but the mechanics are the same: it reduces the capital gains tax rate you pay when you sell all or part of your business, close it down, or dispose of qualifying business assets:
- For disposals in the 2025/26 tax year, the BADR rate is 14%.
- For the 2026/27 tax year, it is now 18%.
That’s still lower than the standard higher-rate CGT rate of 24%, but the gap has is smaller.
2. Current and historic rates of entrepreneurs’ relief
The rate you pay depends entirely on when the disposal happens, not when you claim.
Here’s how the rate has moved since the relief was introduced.
| Tax year | BADR / ER rate | Lifetime limit |
|---|---|---|
| 2008/09 – April 2020 | 10% | £10 million (reduced to £1m on 11 March 2020) |
| April 2020 – 5 April 2025 | 10% | £1 million |
| 6 April 2025 – 5 April 2026 | 14% | £1 million |
| From 6 April 2026 | 18% | £1 million |
The lifetime limit was cut from £10 million to £1 million on 11 March 2020, and the rebrand to BADR followed shortly after.
The two rate rises in 2025 and 2026 were announced in the 2024 Autumn Budget.
3. Who qualifies for Business Asset Disposal Relief?
Eligibility depends on how your business is structured and what you’re disposing of.
The two-year qualifying period is the common thread: whatever route you take, you generally need to have met the conditions for at least two years ending on the date of disposal.
Sole Traders and Business Partners
If you’re a sole trader or a partner, you qualify when you sell all or part of your business, or when you dispose of assets used in the business after it has ceased trading.
You must have owned the business for at least two years up to the date of disposal.
If the business has closed, the disposal of its assets must happen within three years of cessation.
Limited Company Directors and Shareholders
If you run a personal company, you must have held at least 5% of the ordinary share capital and 5% of the voting rights throughout the two-year qualifying period, and you must have been an officer or employee of the company.
The company itself must be a trading company or the holding company of a trading group: not an investment vehicle.
These rules apply equally if you’re selling your shares or closing the company via voluntary liquidation.
Trustees Selling Qualifying Assets
Trustees can claim BADR on the disposal of shares or business assets held in trust, but only where a qualifying beneficiary also meets the standard BADR conditions in their own right.
The claim must be made jointly between the trustees and the beneficiary.
4. The £1 million lifetime limit for BADR
BADR is capped at £1 million of qualifying gains across your lifetime: it’s a running total of every claim you’ve ever made.
Gains above the £1 million lifetime limit are taxed at the standard CGT rates (18% for basic-rate taxpayers, 24% for higher and additional-rate taxpayers from 30 October 2024 onwards).
You still keep the relief on the first £1 million; the excess just falls outside it.
There are two planning points worth knowing:
- Each spouse or civil partner has their own separate £1 million lifetime limit! If you own a business jointly, both of you can potentially claim up to £1 million, doubling the effective shelter to £2 million. (Of course, if each of you meets the qualifying conditions in your own right.)
- Because the limit is lifetime-cumulative, earlier claims count against future disposals. If you used £400,000 of relief selling a previous business five years ago, you only have £600,000 of headroom left.
5. How to claim Business Asset Disposal Relief?
Claims are made through your Self Assessment tax return for the year in which the disposal happens.
HMRC does not offer advance clearance, so the claim is self-certifying based on your own assessment that the conditions are met.
The claim deadline is the first anniversary of 31 January following the tax year of disposal. For a disposal in the 2026/27 tax year, that means the claim must be submitted by 31 January 2029.
The Capital Gains Tax itself is payable on the normal Self Assessment timetable: 31 January after the end of the tax year of disposal.
6. Where to get help as a business owner?
Not every business sale attracts the relief, and this is where the rules trip people up most often. BADR is for disposals of trading businesses and business assets: the very moment something looks like an investment, it falls out of scope.
The main exclusions:
- Property rental businesses are treated as investment, not trading, and do not qualify.
- The disposal of a single business asset in isolation generally doesn’t qualify.
- Goodwill transferred to a close company you control is excluded under anti-avoidance rules introduced in 2015.
- Shares in companies that have ceased trading qualify only if the sale happens within three years of cessation.
- Assets lent to the business but not used in it are treated as investments rather than trading assets.
If you’re in the creative sector and your “business” is really a portfolio of rental properties or passive rights holdings, BADR almost certainly won’t apply. Where it does apply (e.g. an agency sale, a studio wind-down, a production company exit) the relief can deliver tax savings on a once-in-a-career event.
Planning a business sale or exit, and want to know what BADR means for your specific situation?
WallsMan Creative works exclusively with UK creative agencies, studios, production companies, and freelancers moving on from their current setup. We’ll walk you through the numbers before you commit to a timeline.
