Business Asset Disposal Relief in 2026: What It Is?

Business Asset Disposal Relief (BADR) reduces the Capital Gains Tax (CGT) rate on qualifying business disposals to 18% in 2026/27. It can apply when you sell all or part of your business, or certain shares in a company you own. 

Most people know it by its old name, Entrepreneurs' Relief, even though it was renamed back in 2020. The numbers have shifted too, more than once over the years, most recently with a rate rise in April 2026.

This guide covers what the relief does, who qualifies, how much you can save, and what to watch out for if you're planning a sale.

Key points

• You need to meet specific conditions to qualify ✅
  For shares, you generally need to hold at least 5% of the ordinary share capital and voting rights and be an employee or officer of the company for the required two-year period. Sole traders and partners generally need to have owned the business for at least two years.
• Enterprise Management Incentive shareholders skip the 5% requirement 🧑‍💼
  Enterprise Management Incentive (EMI) shares have distinct BADR rules. The 5% ownership test doesn’t apply, and the qualifying period starts on the date the option was granted, not the date the shares were acquired.
• You have to claim BADR yourself 📝
  BADR is normally claimed through your Self Assessment tax return for the year you dispose of the asset. It’s worth checking your eligibility well before the sale because HMRC won’t confirm in advance whether a disposal qualifies.
• ANNA can simplify the tax admin around a business sale 🚀
  Keeping business finances, expenses, and tax records organised throughout the year makes it easier to prepare for your Self Assessment and understand your wider tax position. ANNA helps automate this admin so you can spend less time on it. 

What does Business Asset Disposal Relief do?

BADR reduces the rate of CGT you pay when you dispose of a qualifying business or shares in a qualifying company.

For disposals made from 6 April 2026, BADR charges 18% CGT on qualifying gains, up to a lifetime limit of £1 million. 

🧠 Good to know

The £1 million figure covers your total qualifying gains across every BADR claim you ever make, not just the sale you're working on right now. Once you've used up the full £1 million, any further qualifying disposals are taxed at the standard CGT rate.

Who can claim BADR

BADR is available to individuals, not companies. It applies to you personally as a shareholder, sole trader, or partner.

A few different situations can qualify:

• Selling all or part of a business you've run as a sole trader or in partnership
• Selling shares in a company where you're an officer or employee, and where you hold at least 5% of the ordinary share capital and voting rights
• Disposing of assets used by a business or company, alongside a related disposal of the business or shares

Is there an equivalent to BADR for companies?

The closest equivalent to BADR for companies is the Substantial Shareholdings Exemption (SSE). It can make a qualifying gain from selling shares in another company exempt from Corporation Tax.

Unlike BADR, SSE doesn’t give you a lower tax rate. If the company meets the rules, it doesn’t pay Corporation Tax on the qualifying gain.

SSE can apply when a company sells shares in another company, such as when a parent company sells a subsidiary. It doesn’t apply when a company sells the assets of its own business.

The conditions you have to meet for BADR

HMRC considers what you’re selling as well as how long you've held the asset and how involved you've been in the business.

For a share sale, you generally need to have held at least 5% of the ordinary share capital and voting rights and have been an employee or officer of the company throughout a two-year period ending on the date of disposal. 

The company also has to be a trading company or the holding company of a trading group, rather than one whose activities are mainly investment-based.

If you’re a sole trader or in a partnership, you need to have owned the business for at least two years before the sale.

💡 Did you know? 

These conditions don't just apply on the day of the sale. If you dip below the 5% shareholding threshold, or step down as an employee or director at any point during that two-year window, that can affect whether the disposal qualifies at all, even if you meet every condition on the sale date itself.

A different route in for Enterprise Management Incentive shareholders

If you hold shares through an EMI scheme, the BADR conditions work slightly differently for you.

EMI shares are an exception to the normal 5% shareholding requirement. You can qualify for BADR on EMI shares regardless of how small your percentage stake is. That matters a lot for employees who've been granted a modest option in a growing company and never expected to clear the 5% threshold.

The two-year qualifying period also starts at a different point for EMI shares. For most share disposals, the clock starts when you acquire the shares. For EMI shares, it starts when you receive the option to buy the shares. 

This can work in your favour if there was a gap between the grant and exercise, since time spent holding the option itself counts towards the two-year period.

🧠 Good to know

The company still has to meet the usual trading company requirement for EMI shares to qualify, and you still have to be an employee of the company or a group company throughout the two-year period ending on the disposal. The relaxed shareholding rule only removes the 5% test, not the other conditions.

How to claim BADR

BADR isn't granted automatically just because your disposal meets the conditions. You have to actively claim it, normally through your Self Assessment tax return for the year the disposal took place.

The deadline for claiming is the first anniversary of the 31 January following the end of the tax year in which you made the disposal.

For example, if the disposal was made during the 2026/27 tax year, your claim deadline is 31 January 2029.

You can't apply to HMRC in advance to get confirmation that a planned disposal will qualify. This means a lot of the groundwork, such as checking your shareholding, involvement, and holding period, needs to happen well before the sale itself.

🧠 Good to know

Each spouse or civil partner has their own separate £1 million lifetime limit. If you both hold shares or an interest in the same business, how you split a disposal between you can make a real difference, since it can double the amount of gain that benefits from the reduced rate.

How much you could save

The amount you save depends on the size of your gain and the CGT rate that would otherwise apply.

For example, a £1 million qualifying gain taxed at 18% would result in £180,000 of CGT before taking account of any available CGT allowance or other factors. At a higher standard rate, the same gain could result in a larger tax bill.

If your total qualifying gains exceed £1 million, the excess is taxed at the standard CGT rate.

BADR and assets you own personally 

BADR can sometimes apply to an asset you personally own if your business has used it and you sell it alongside your business interest. This is known as an associated disposal.

For example, you might own a commercial property in your own name and rent it to your company. If you sell the company and the property as part of the same exit, the gain on the property may also qualify for BADR.

However, the relief isn’t automatic. The amount you can claim may be reduced if:

• You only used the asset for the business for part of the time you owned it
• You used only part of the asset for the business
• You charged your company market rent for using the asset

So, even if the sale of your business or shares qualifies for BADR in full, the relief on a personally owned asset may be limited or unavailable.

Get your business finances ready for a sale with ANNA

Planning for a business sale involves more than calculating the final CGT bill. Keeping your company finances organised throughout the year gives you a clearer picture of your profits, expenses, and transactions, making it easier to prepare for a disposal and work out the figures you need.

ANNA can help simplify the financial admin around your business with:

• Automatic bookkeeping: Keep your business income and expenses organised as transactions happen, rather than reconstructing your records when preparing for a sale
• Expense categorisation: Automatically categorise business spending for a clean record of your company's costs
• Real-time tax estimates: Keep track of your estimated tax position as your business finances change
• Receipt capture: Store receipts alongside your transactions, so every expense has proof attached
• Smart Pots: Set money aside for taxes automatically, so you’re not caught out when the bill’s due
• Business account: Open a dedicated business bank account and keep company finances separate from personal spending
• VAT returns: Manage your VAT obligations and stay prepared for filing deadlines
• PAYE: Calculate your salary deductions, generate payslips, and file to HMRC each pay run
• Self Assessment: File your personal tax return through ANNA when you have income or gains to declare
• 24/7 customer support: Get help with any tax-related questions anytime

Sign up with ANNA today, and prepare for a sale with minimal admin.