What is business asset disposal relief?
Answered 11 March 2026
Business Asset Disposal Relief (BADR)
What the law says
Nature of the relief Business Asset Disposal Relief (BADR) provides a lower rate of capital gains tax in respect of "qualifying business disposals" made by individuals (and, in certain cases, trustees).
Qualifying business disposals fall into three categories:
- A material disposal of business assets (TCGA 1992, s.169I)
- A disposal of trust business assets (s.169J)
- A disposal associated with a relevant material disposal (s.169K)
Material disposal — what qualifies: A "disposal of business assets" means:
- a disposal of the whole or part of a business;
- a disposal of assets in use at the time a business ceases, made within 3 years of cessation; or
- a disposal of shares or securities in a company.
For a disposal to be material:
- For a business disposal: the individual must have owned the business for 2 years ending with the disposal date.
- For shares: Condition A requires that throughout the 2 years ending with the disposal, (a) the company is the individual's personal company and is a trading company or holding company of a trading group, and (b) the individual is an officer or employee of the company.
Claiming the relief BADR must be claimed — it is not automatic. A claim must be made on or before the first anniversary of 31 January following the tax year of the disposal.
HMRC guidance / practice
History and rates BADR was originally introduced as Entrepreneurs' Relief by Finance Act 2008 and renamed in Finance Act 2020 with effect from 6 April 2020.
The applicable CGT rates on qualifying gains have changed over time:
- 6 April 2008 – 22 June 2010: gains reduced by 4/9ths
- 23 June 2010 – 5 April 2025: gains charged at 10%
- From 6 April 2025: gains charged at 14%
- From 6 April 2026: gains charged at 18%
Lifetime limit The relief is subject to a lifetime limit on the total gains that can qualify. The current limit (for disposals on or after 11 March 2020) is £1,000,000. Previous limits were higher (up to £10,000,000 between April 2011 and March 2020).
An individual may claim BADR on more than one occasion (e.g. on successive business disposals), but all qualifying gains across their lifetime count towards the single £1 million limit.
Practical summary HMRC describes BADR as a relief that charges certain gains at a lower rate than the standard CGT flat rate, with the main conditions reflecting similarities to the former retirement relief. Gains on the disposal of the whole or part of a business, or certain disposals of shares or securities, may qualify.
Citation sources
Business Asset Disposal Relief, formerly known as Entrepreneurs’ Relief (TCGA92/S169H to S169V) was introduced to complement the flat rate for capital gains tax that applies to disposals taking place on or after 6 April 2008. From that date, disposals no longer attract indexation or taper relief. This relief has the effect of charging certain gains at a lower rate of tax than the flat rate. The main conditions reflect similarities with those for retirement relief although with significant simpli
Part V Transfer of business assets , business asset disposal relief and investors' relief Chapter 3 business asset disposal relief Introduction 169H 1 This Chapter provides for a lower rate of capital gains tax in respect of qualifying business disposals ( to be known as “business asset disposal relief” ). 2 The following are qualifying business disposals— a a material disposal of business assets: see section 169I, b a disposal of trust business assets: see section 169J, and c a disposal associa
Part V Transfer of business assets , business asset disposal relief and investors' relief Chapter 3 business asset disposal relief Material disposal of business assets 169I 1 There is a material disposal of business assets where— a an individual makes a disposal of business assets (see subsection (2)), and b the disposal of business assets is a material disposal (see subsections (3) to (7)). 2 For the purposes of this Chapter a disposal of business assets is— a a disposal of the whole or part of
The content in this manual covers a much higher level of detail compared to say a Helpsheet supporting the Self Assessmnent Tax Return. If you are looking for an introduction to the main rules for the relief for a particular year please see the Business Asset Disposal Relief (Self Assessment helpsheet HS275) on GOV.UK and select the year you are considering. Entrepreneurs’ Relief was renamed in Finance Act 2020 with effect from 6 April 2020. The new name is generally used in this guidance but sh
Part V Transfer of business assets , business asset disposal relief and investors' relief Chapter 3 business asset disposal relief Relief to be claimed 169M 1 Business asset disposal relief is to be given only on the making of a claim. 2 A claim for business asset disposal relief in respect of a qualifying business disposal must be made— a in the case of a disposal of trust business assets, jointly by the trustees and the qualifying beneficiary, and b otherwise, by the individual. 3 A claim for
Entrepreneurs’ relief was renamed in Finance Act 2020 with effect from 6 April 2020. The new name is generally used in this guidance but should be read as applying to times before that date. The maximum amount of gains which may benefit from Business Asset Disposal Relief is subject to a lifetime limit for all qualifying disposals. This lifetime limit has been revised as follows: For qualifying disposals made: from 6 April 2008 to 5 April 2010 £1,000,000 from 6 April 2010 to 22 June 2010 £2,000