As part of a raft of tax changes announced in the Autumn 2024 Budget, the rates of capital gains tax (CGT) applying to assets which qualify for Business Asset Disposal Relief (BADR), will be increasing over the next two tax years.

BADR, formerly Entrepreneurs’ Relief, was introduced in 2008 to provide a tax break for individuals selling all or part of their business, employees selling shares, or trustees selling trust assets. Any gain on assets disposed of that met the relevant criteria was taxed at the lower CGT rate of 10%.

Initially, any individual could rely upon the 10% CGT rate for asset disposals over their lifetime up to a value of £10 million. This was drastically reduced to a lifetime limit of £1 million in 2020.

Now, following the Budget on 30 October 2024, the government has announced plans for the reduced CGT rate available under BADR to increase from 10% to 14% for disposals made on or after 6 April 2025, and again to 18% for disposals made on or after 6 April 2026.

This is in line with other increases in the rate of CGT payable for non-BADR qualifying disposals, albeit these other CGT changes occurred from 30 October 2024.

Whilst BADR is still a valuable relief when disposing of assets related to your business or employer, the changes announced in the Budget further diminish the benefits of this tax break.

It remains to be seen how this will affect tax-planning and business sales in the coming months and years.

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As the landscape of Business Asset Disposal Relief continues to evolve, proactive tax planning has never been more essential. Whether you are considering the sale of a business, shares, or trust assets, early preparation can help you make informed decisions and optimise your position under the new rules. Contact our Corporate and Commercial specialists to discuss your plans and ensure you are well-prepared for the changes ahead.