Business Asset Disposal Relief
Business Asset Disposal Relief (Entrepreneurs’ Relief)
BADR is great for business owners as it provides substantial tax savings. The main role of Business Asset Disposal Relief (BADR) is to encourage business investment and growth, by reducing the cost of disposing of a business or shares in a company.
If you are considering selling your business, you might qualify for Business Asset Disposal Relief (which was previously known as Entrepreneurs’ Relief). This is a reduction of your capital gains tax that you might be entitled to if you are selling a business.
Can I claim Business Asset Disposal Relief for my business?
You may qualify for Business Asset Disposal Relief if:
- You are a sole trader and considering selling all, or part of, your business.
- You are a partner selling a business or its assets.
- You are selling a business or its assets and control a minimum of 5% of the net assets of the company.
You may also qualify for Business Asset Disposal Relief if you sell assets that were used in your business within three years of closing it down. What doesn’t allow you to qualify, however, is owning a rental property portfolio within a company or purchasing a business and deciding to sell it before you’ve held it for the qualifying two year period.
What are the benefits of Business Asset Disposal Relief?
Business Asset Disposal Relief allows you to qualify for a lower rate of Capital Gains Tax. Providing your business qualifies, you will only be liable for Capital Gains Tax at the basic rate, or 14% (from 6 April 2025 to 5 April 2026) or 18% (from 6 April 2026 onwards) on the first £1m of gains you make from the sale of the business.
This is significant because if you are a higher-rate taxpayer, you’d usually be charged at a rate of 24%. Gains above the £1m threshold will be charged at the full rate of 20%. This threshold applies to the individual(s) selling the business, rather than per business sold.
For more information on Capital Gains Tax and Business Asset Disposal Relief, read our factsheet.
How Edwards Accountants can help
At Edwards Accountants, we boast a team of highly experienced tax specialists who can assist you with identifying and claiming Business Asset Disposal Relief on the sale of your business or its assets, as well as a range of other personal tax advisory services.
Our expert tax accountants will maintain excellent standards of communication with you throughout the entire process of the sale of your business, ensuring each part of the process maximises your wealth and is compliant with legislation.
Not only this, but we can also provide additional corporate tax services to support you during this time, including business advisory, corporate finance and advice on corporate taxation.
If you’d like to find out more about our tax consultancy services or applying for Business Asset Disposal Relief, contact one of our specialist tax advisors today.
Insights
The manufacturing industry is continuously evolving, with many businesses driving innovation through smarter processes, advanced technologies, and continuous improvements to...
Payroll taxes are the taxes employers and employees pay on earnings, including Income Tax and National Insurance contributions. These taxes...