Whether you plan to sell to a third party or pass the business on to your management team, tax can have a significant impact on how much of the sale proceeds you keep.
For many years, one of the most valuable reliefs available to business owners on a disposal has been Business Asset Disposal Relief (BADR).
However, changes announced in recent Budgets, including the Autumn Budget on 28 October 2026, have made the relief much less generous than it once was.
What is BADR?
BADR enables eligible individuals to benefit from a reduced rate of Capital Gains Tax (CGT) when disposing of all or part of their business.
The relief may also be available on the sale of qualifying shares in a trading company, subject to specific eligibility criteria.
The relief has been scaled back significantly in recent years. The BADR rate rose from 10 per cent to 14 per cent in April 2025 and then to 18 per cent from 6 April 2026.
In addition, the Autumn Budget announced that the lifetime limit for qualifying gains will be halved from £1 million to £500,000 for disposals made on or after 6 April 2027.
Transitional rules are expected to apply where a contract is entered into before 6 April 2027 but the sale completes after that date.
The Budget also announced a new Founders’ Relief, which is subject to consultation. It is expected to offer a 10 per cent CGT rate on up to £10 million of lifetime gains for qualifying founders of high-growth, innovative companies, although the eligibility criteria are likely to be narrow.
As a result, business owners with larger gains are likely to pay considerably more Capital Gains Tax than they would have done a few years ago. Any gains above the new £500,000 limit will be taxed at the main CGT rates of up to 24 per cent, making planning your exit all the more important.
What do the changes to BADR mean for exit plans?
If you are a business owner planning an exit in the coming years, you may need to consider how the changes to BADR could affect the amount of tax payable.
It may be worth reviewing whether your current exit timeline is still appropriate, or whether bringing a sale forward to complete before 6 April 2027 could make sense.
That said, tax is only one part of exit planning.
Profitability, market conditions, buyer demand and the overall attractiveness of the business all play a part in deciding when the time is right to sell.
Bringing a sale forward purely because of tax changes may not be the right decision if it means accepting a lower price for the business.
Even so, the changes are a good opportunity to review your current plans and make sure they still align with your long-term objectives.
Checking whether you meet the qualifying conditions for BADR and understanding the tax implications of different sale dates can help you avoid costly surprises later in the process.
How can we help?
BADR remains an important relief for business owners, but the recent changes mean that it can no longer be taken for granted.
Seeking professional advice early can help you understand the impact of the upcoming BADR changes and ensure you retain as much of the value you’ve worked hard to create as possible.
