SearchBusiness Asset Disposal Relief 2026
BADR Changes 2026: Lifetime Limit Halved to £500,000
Updated 28 October 2026 following the Autumn Budget
In the Autumn Budget on 28 October 2026, the Chancellor announced that the lifetime limit for Business Asset Disposal Relief (BADR), formerly Entrepreneurs’ Relief, will be halved from £1m to £500,000 from 6 April 2027. The 18% rate is unchanged.
If you’re planning to sell your business, or part of it, in the next few years, this could affect when you sell and how much tax you pay. Here’s what’s changing, who’s affected and what to do now.
At a glance
| Until 5 April 2027 | From 6 April 2027 | |
|---|---|---|
| BADR rate | 18% | 18% |
| Lifetime limit | £1m | £500,000 |
| Gains above the limit | 24% (higher-rate taxpayers) | 24% (higher-rate taxpayers) |
| Maximum lifetime saving vs 24% | £60,000 | £30,000 |
| Investors’ Relief limit | £1m | £1m (unchanged) |
What is BADR?
BADR reduces the Capital Gains Tax you pay when you sell all or part of a qualifying business, shares in your personal trading company, or business assets after closing a business. Instead of paying the standard 24% CGT rate, you pay 18% on qualifying gains up to your lifetime limit.
The qualifying conditions aren’t changing. For a share sale, you generally need to have been an officer or employee of a trading company and to have held at least 5% of the shares and votes for at least two years before the sale.
What it means for you
| Qualifying gain | Tax before 6 April 2027 | Tax from 6 April 2027 | Extra tax |
|---|---|---|---|
| £300,000 | £54,000 | £54,000 | None |
| £500,000 | £90,000 | £90,000 | None |
| £1m | £180,000 | £210,000 | £30,000 |
| £3m | £660,000 | £690,000 | £30,000 |
Assumes a higher-rate taxpayer with their full BADR limit unused, and ignores the annual exempt amount.
If your gain is under £500,000, nothing changes. If it’s over £500,000, you’ll pay up to £30,000 more for a sale on or after 6 April 2027.
Who’s affected?
- Owners with gains above £500,000. The larger the sale, the more likely it is that the full £30,000 extra tax applies.
- Owners who’ve already used some of their BADR limit. The limit is cumulative, so earlier claims count against the new £500,000. If you’ve already claimed £500,000 or more, you’re unlikely to have any BADR left from April 2027.
- Couples and business partners. The limit is per person, so where shares are held jointly, each owner has their own £500,000.
Why timing matters
- There’s a window until 5 April 2027. A qualifying sale completed before then can still use the full £1m limit.
- Contracts that straddle the date need care. When BADR rates rose in 2025 and 2026, anti-forestalling rules meant contracts signed before the change but completed after it didn’t always get the old rate. Expect similar rules here, and get advice before relying on an early signature.
- Don’t let £30,000 drive a multi-million-pound deal. Valuation, buyer terms and deal certainty usually matter far more than the timing of a tax change.
Could Founders’ Relief be better for you?
The Budget also introduced Founders’ Relief: a 10% CGT rate on up to £10m of lifetime gains, for disposals on or after 6 April 2027. It’s aimed at founders of high-growth, innovative companies, and the conditions are demanding. You’ll generally need to have held at least 25% of the company from the start, and the company must meet turnover, headcount and growth or R&D tests.
If you might qualify, waiting until after 6 April 2027 could save far more than BADR ever could. Any BADR claimed from that date also reduces your £10m Founders’ Relief limit, so the order in which you use the reliefs matters.
Read our guide to Founders’ Relief here.
What to do now
- Work out how much of your BADR limit you’ve used. Check past claims, including any from before 2020 when it was called Entrepreneurs’ Relief.
- Check whether you qualify. The 5% and two-year conditions need to be met throughout the qualifying period, so confirm your shareholding and role now.
- If a sale is close, plan the timing. Decide whether completing before 6 April 2027 is realistic and worth it.
- Consider Founders’ Relief. If your company has grown quickly, check whether waiting would put you in a better position.
Frequently asked questions
Is the BADR rate changing?
No. The rate stays at 18%. Only the lifetime limit is changing.
Is Entrepreneurs’ Relief the same as BADR?
Yes. Entrepreneurs’ Relief was renamed Business Asset Disposal Relief in April 2020.
Does the change affect Investors’ Relief?
No. The Investors’ Relief lifetime limit stays at £1m.
I’ve already used £1m of BADR. Does this affect me?
Not for past sales. Those claims stand. But you’re unlikely to have any BADR available for future sales from 6 April 2027.
Speak to our tax team
Our tax and corporate finance partners advise business owners across the North West and beyond on exits, sales and succession. We can check how much BADR you have left, whether Founders’ Relief could apply, and the best timing for your sale.
Contact us via imagine@hurst.co.uk or 0161 477 2474
This page reflects announcements made in the Autumn Budget on 28 October 2026. Detail may change as legislation is published. It isn’t advice for your specific circumstances, so please speak to us before acting.
