UK Business Asset Disposal Relief BADR 18% Tax Guide 2026

Comprehensive 2026 tax guide for business owners selling company shares or qualifying trading assets: Business Asset Disposal Relief (BADR, formerly Entrepreneurs' Relief), 18% Capital Gains Tax rate for qualifying disposals from 6 April 2026, £1,000,000 lifetime limit, and 2-year qualifying conditions.

1. BADR Qualifying Conditions & £1m Lifetime Limit

Business Asset Disposal Relief (BADR) reduces Capital Gains Tax on qualifying business disposals. For disposals made on or after **6 April 2026**, qualifying gains are charged at **18%** rather than the normal applicable CGT rates. The lifetime limit for qualifying gains is **£1,000,000 per individual**. The rate was 14% for qualifying disposals from 6 April 2025 to 5 April 2026.

BADR Requirement	Statutory Condition for Share Disposal	Statutory Condition for Sole Trader Sale
Generally must satisfy the relevant conditions throughout the 2 years before disposal	Generally must own and carry on the qualifying business throughout the relevant 2-year period	Must own trading business for at least 24 continuous months
Company Status	Must be a commercial trading company (or holding company of trading group)	Must be a active commercial trading business
For non-EMI personal-company shares, generally at least 5% of shares and voting rights plus the required economic entitlement; EMI shares are subject to special rules	N/A for a sole trader, subject to the separate qualifying-business conditions	N/A (100% sole trader ownership)
Role in Company	Must be an official officer (director) or employee of the company	N/A (Sole proprietor)

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Key Takeaways

BADR charges qualifying gains at 18% for disposals made on or after 6 April 2026.
The lifetime limit is £1,000,000 of qualifying gains per individual.
The relevant qualifying conditions generally need to be satisfied throughout a 2-year period before disposal or, in certain cessation cases, before the business ceased.
For ordinary personal-company shares, the 5% shareholding and voting-rights tests and economic-entitlement requirements generally apply; EMI shares have special rules.
BADR can be claimed through Self Assessment or the applicable HMRC claim process, and the filing deadline depends on the tax year of disposal.

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Frequently Asked Questions (6 Interlinked FAQs)

For qualifying disposals made on or after 6 April 2026, Business Asset Disposal Relief applies an 18% CGT rate. The rate was 14% for qualifying disposals from 6 April 2025 to 5 April 2026.

The lifetime limit is £1 million of qualifying capital gains for each individual. Earlier BADR claims count toward the same lifetime limit.

The relevant qualifying conditions generally need to be satisfied throughout the 2 years ending with the disposal. Special rules apply to disposals after a business or trading company ceases.

For ordinary shares in a personal company, the 5% shareholding and voting-rights requirements generally apply together with the required economic entitlement and officer/employee conditions. EMI shares have a special exception to the 5% requirement.

Yes, qualifying business assets can qualify in certain circumstances. The conditions depend on whether the asset is being disposed of as part of the business, after cessation, or as an associated disposal.

You can claim through Self Assessment or the applicable HMRC claim process. The deadline depends on the tax year of disposal; for example, HMRC currently gives 31 January 2028 as the deadline for claims relating to the 2025/26 tax year.