From 6 April 2026, the rate of Business Asset Disposal Relief (BADR) will increase to 18%, marking a notable shift in the capital gains tax landscape for business owners planning an exit.
For many business owners, BADR has been a valuable way to reduce CGT on the sale of a business, and a rise from 14% to 18% will narrow that advantage and will likely mean a higher overall CGT bill compared to previous years. The standard rate of CGT remains at 24%. BADR is restricted to £1 million of gains per person and so as a result of the change the maximum tax saving from BADR will reduce from £100,000 to £60,000.
While the Business Asset Disposal Relief remains an important factor during planning, the focus for business owners planning an exit, sale, or restructure should be on understanding their tax position and planning for that in light of the new 18% rate.
If a sale, succession, or restructure is on your horizon, this is a good moment to check your position and explore how to manage your CGT exposure with the new rates.
Stephen Charles, Tax Partner at Hawsons, says:
“Many businesses will have relied on Business Asset Disposal Relief to keep their CGT exposure at a manageable level during their exit. With the rate now increasing to 18%, this position will change. The focus for business owners should be to understand how this impacts their overall tax position and to consider what steps can be taken to manage that exposure. With the right advice, there may still be ways to plan effectively and avoid unnecessary tax costs”.
If you are a business owner thinking about succession plans, or a business restructure, and want to understand further how these changes could affect you, contact Hawsons’ Tax team.
