When applicable, BADR allows qualifying gains to be taxed at a reduced CGT rate on the first £1m of qualifying gains in your lifetime, significantly improving the overall return from a business sale.

What Is BADR?

If you meet the qualifying conditions, capital gains on the disposal of business assets are taxed at just 14%, rather than the standard CGT rate of up to 24%. This relief can apply to:

• The sale of a whole or part of a business
• Shares in a personal trading company
• Business assets sold after the business has ceased

From April 2026 the rate of BADR is increasing from 14% to 18%.

There are a number of conditions which must be met in order to qualify for BADR, and generally these conditions must have been met for a period of two years prior to a sale. This makes early planning more important than ever.

Why Timing and Structure Matter

The conditions for BADR are detailed and time-sensitive including minimum shareholding, employment, and ownership periods. Missing a key requirement by just a few months or holding shares in the wrong structure can result in losing the relief entirely.

That’s why we recommend regular reviews and early advice, particularly if:

• You’re planning to sell your business within the next 1–5 years
• You’ve recently restructured or added investors
• You hold shares in a company that may not qualify as a trading business
• You’re considering gifting shares or passing the business to family

For example this may include reviewing the share structure to ensure that a spouse has at least 5% of the ordinary, voting share capital. The benefit of this planning potentially meaning that between the two spouses they can access up to £2m in BADR relief, thereby potentially doubling the relief available to the couple subject to all the conditions being met.

Why Stratos?

At Stratos, we help business owners navigate the changing BADR landscape and make the most of available tax reliefs. Whether you’re preparing for a sale, restructuring, or simply looking ahead, we can:

• Review your current position to determine BADR eligibility and any opportunities to maximise relief. For example this may include reviewing the share structure to ensure that a spouse has at least 5% of the ordinary, voting share capital thereby potentially doubling the chargeable gains subject to the lower rates of CGT under BADR from £1m to £2m.
• Highlight any risks to qualifying status such as large cash balances or significant investment assets.
• Recommend practical steps to preserve or obtain relief.