Business Asset Disposal Relief
What is business asset disposal relief? A reduced rate of Capital Gains Tax when you sell your business. It used to be called entrepreneurs relief, and it has been cut twice in two years, so the rate that applies depends entirely on when you sold.
Updated 13 September 2026 · Tax year 2026/27
Business asset disposal relief rates #
The rate is fixed by the date of disposal, not the date you claim, so check which row you are in before doing any arithmetic.
| Date of disposal | Rate | Tax on a £500,000.00 gain |
|---|---|---|
| On or before 5 April 2025 | 10% | £50,000.00 |
| 6 April 2025 to 5 April 2026 | 14% | £70,000.00 |
| From 6 April 2026 | 18% | £90,000.00 |
The business asset disposal relief limit #
£1,000,000.00 of qualifying gains, for life. Not per disposal, not per company, and not per tax year: a single cumulative allowance across everything you ever claim.
It has been £1,000,000.00 since 11 March 2020, when it was cut from £10 million. If you claimed relief before then, those earlier gains still count towards the current limit, so a business owner who used the old allowance may have nothing left.
Gains above the limit are taxed at the normal Capital Gains Tax rate, not at 18%.
Business asset disposal relief conditions #
How to qualify for business asset disposal relief on a share sale. All of these must be true for at least 2 years up to the date of disposal:
- You held at least 5% of the shares in the company
- You held at least 5% of the voting rights
- You were an officer or employee of the company
- The company was trading, rather than mainly holding investments
For a sole trader or partnership selling the business itself, the equivalent test is that you owned the business for at least 2 years to the date of sale. Selling individual assets while continuing to trade does not qualify: the relief is for disposing of a business or part of one, not for selling equipment.
Tax on selling a business in the UK #
Selling a business tax treatment depends on what is actually being sold, and the two routes are taxed very differently.
| Selling the shares | Selling the trade and assets | |
|---|---|---|
| Who is taxed | You, personally | The company first, then you on extraction |
| Tax | Capital Gains Tax, 18% with BADR | Corporation Tax on the company gain |
| Getting the cash out | Already personal | A second tax charge on dividends or liquidation |
| Usually preferred by | The seller | The buyer, who avoids inherited liabilities |
That difference is the heart of most sale negotiations. Tax implications of selling a business fall on opposite sides depending on the structure, and the price usually moves to reflect it.
Where the sale is by liquidation rather than a share sale, the closing a limited company guide covers the £25,000.00 rule that decides whether the distribution is capital or income, which has to be settled before BADR is relevant at all.
What does not qualify #
- Investment companies. The company must be trading. Substantial non-trading activity can disqualify it entirely
- Shares below 5%, unless they came through an Enterprise Management Incentive scheme, which has its own relaxed conditions
- Selling assets while trading on. The relief is for disposing of a business, not for selling a machine
- Property held personally and let to the company, which at best gets partial relief and often none
Business asset disposal relief on commercial property, and on a furnished holiday let, are both narrower than they once were and depend heavily on the detail. Those are cases for an adviser rather than a guide.
Claiming it #
Through your Self Assessment tax return, in the Capital Gains Tax pages, for the tax year the disposal falls in. The claim deadline is the first anniversary of the 31 January following that tax year.
Keep the evidence for the 2 year conditions: share certificates, the register of members, payslips or board minutes showing officer or employee status, and accounts showing the company was trading. The Self Assessment deadlines guide covers the filing dates.
Common questions #
What is business asset disposal relief?
A reduced rate of Capital Gains Tax on selling all or part of a qualifying business, or shares in your own trading company. It charges the gain at 18% from 6 April 2026 instead of the normal Capital Gains Tax rate, up to a lifetime limit of £1,000,000.
What is entrepreneurs relief?
The old name for the same thing. Entrepreneurs relief was renamed Business Asset Disposal Relief in 2020. The name changed, the relief did not, so entrepreneurs relief UK guidance and BADR guidance describe the same rules.
What are the business asset disposal relief rates?
10% on or before 5 April 2025, 14% between 6 April 2025 to 5 April 2026, and 18% from 6 April 2026. The rate is fixed by the date of disposal, so which one applies depends on when you sold.
What is the business asset disposal relief limit?
£1,000,000 of qualifying gains in a lifetime, in place since 11 March 2020. It is cumulative across every claim you ever make, and gains above it are taxed at the normal Capital Gains Tax rate.
What are the business asset disposal relief conditions?
For a share sale, for at least 2 years up to the disposal you must have held at least 5% of both the shares and the voting rights, been an officer or employee of the company, and the company must have been trading rather than investing.
What are the entrepreneurs relief changes?
Two that matter. The lifetime limit fell from £10m to £1,000,000 on 11 March 2020, and the rate has risen twice since, from 10% to 14% and then to 18%.
Will business asset disposal relief be scrapped?
It has not been, but it has been narrowed repeatedly: a 90% cut to the lifetime limit and a rate that has nearly doubled in two years. Planning on the basis that the current rate is permanent is optimistic, though nothing has been announced.
How much tax do you pay on selling a business?
Capital Gains Tax on the gain. With Business Asset Disposal Relief that is 18% up to £1,000,000. Without it, the normal Capital Gains Tax rates apply, which are higher.