Tax Planning
How the Fall in Business Asset Disposal Relief (BADR) Rates Impacts Entrepreneurs
From 6 April 2026, BADR rates increase—this article explains what qualifies, what changes, and how entrepreneurs can adapt to capital gains tax reforms.
By NomadicTax Research Team • 5-8 min read • April 7, 2026
## What’s Changing with BADR and Capital Gains Tax
From 6 April 2026, the **Business Asset Disposal Relief** (BADR) rate—formerly Entrepreneurs’ Relief—is set to **rise from 14% to 18%**, mirroring the main lower rate of Capital Gains Tax (CGT). ([gov.uk](https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg63955?utm_source=openai))
Additionally, Investor’s Relief (another relief tackling capital gains) will be aligned with this new lower CGT rate. ([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/6926eb222a37784b16ecf526/Final_print_HMT_Budget_2025_TEXT_PRINT_NEW.pdf?utm_source=openai))
## Who’s Affected & What Qualifies
The relief still **only applies to gains on qualifying disposals**—assets like business shares or assets used in your trade, subject to certain ownership and personal participation tests. Gains must meet BADR criteria. For example:
- You must have owned the relevant business assets for at least two years before disposal.
- You must be a sole trader, business partner, or shareholder carrying out a business through a company and meet other qualifying conditions.
## Examples: Before vs. After
| Scenario | Disposal Date | Gain | Applicable Rate | Tax Payable on Gain* |
|----------|----------------|------|------------------|------------------------|
| Sole trader sells qualifying business shares in **March 2026** | 5 April 2026 | £100,000 | 14% | £14,000 |
| Same disposal **on or after 6 April 2026** | 6 April 2026 | £100,000 | 18% | £18,000 |
*Assumes full gain qualifies, ignoring personal allowances or further reliefs.
## Actionable Advice for Entrepreneurs
- **Plan ahead**: If possible, complete qualifying disposals before 6 April 2026 to benefit from the lower 14% rate.
- **Review asset sales and exits**: Where timing flexibility exists, delay disposals if they don’t meet qualifying criteria now.
- **Documentation is key**: Have robust records showing your involvement and ownership period to satisfy HMRC requirements.
- **Model cash flow**: The higher rate increases tax payable; plan for the impact on net proceeds, especially for retirement or business exit planning.
## Broader Implications
- This change is part of wider efforts in the Budget 2025 to reform **taxes on wealth and assets**. ([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/6926eb222a37784b16ecf526/Final_print_HMT_Budget_2025_TEXT_PRINT_NEW.pdf?utm_source=openai))
- Entrepreneurs who rely on BADR as part of succession or exit strategies will need to adapt. Those unable to satisfy qualifying requirements or timing may see significantly higher liabilities.
> "From 6 April 2026, the CGT rate for Business Asset Disposal Relief and Investors’ Relief will increase to match the main lower rate at 18%." ([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/6926eb222a37784b16ecf526/Final_print_HMT_Budget_2025_TEXT_PRINT_NEW.pdf?utm_source=openai))
## Summary
| Key Date | Rate Change | Affected Reliefs |
|----------|-------------|-------------------|
| 6 April 2025 | BADR/Investor’s Relief goes from **10% → 14%** | Transitional period—used for disposals after that date until 5 April 2026. ([gov.uk](https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg63955?utm_source=openai)) |
| 6 April 2026 | Reliefs align to **18%** rate | Major jump for those awaiting exit events or considering sales.
### What to Do Now
- If a sale or disposal is already planned: **accelerate it**, provided you meet all qualifying conditions.
- Review business structure & shareholding profiles to ensure eligibility.
- Speak with a tax adviser to re-evaluate your exit or succession plan under the new regime.
**Category**: Tax Planning
**Tax Home**: UK
**Author**: NomadicTax Research Team
**ReadTime**: 6 min
**Published**: true