Tax Planning
Understanding the Increase in Capital Gains Tax Rates for Business Asset Disposal Relief and Investors’ Relief
From April 2026 the special 10% CGT rates under Business Asset Disposal Relief and Investors’ Relief are increasing—what that means, and how individuals and businesses can respond.
By NomadicTax Research Team • 5-8 min read • February 23, 2026
## Background
Business Asset Disposal Relief (BADR), formerly Entrepreneurs’ Relief, offers reduced CGT rates on qualifying disposals of business assets. Likewise, Investors’ Relief gives relief to those disposing qualifying shares or securities. Under recent reforms:
- For disposals made on or before **5 April 2025**, BADR and Investors’ Relief are taxed at **10%**.
- From **6 April 2025**, the rate increases to **14%**, and from **6 April 2026**, it rises further to **18%**. ([gov.uk](https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg63955?utm_source=openai))
## Real-world Impacts
- If you planned to sell your business or shares and used to bank on the 10% rate, you now need to update your projections and expectations. Selling after 6 April 2026 will incur significantly higher tax.
- Anti-forestalling rules applied: certain structuring or share reorganisations arranged just to lock in cheaper rates may be subject to the higher tax if done after specific dates. ([gov.uk](https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64175?utm_source=openai))
## What You Can Do Now
- **Timely disposals**: If you expect a qualifying disposal, examine whether completing it before **6 April 2026** could lock in a lower 14% rate, instead of higher future rates.
- Use the full period and lifetime limits of relief—if you haven’t used your BADR allowance, plan to maximise it.
- For Investors’ Relief, check whether any share-holding meets requirements, including the qualifying duration and company status.
## Example Scenario
- *Alice* holds qualifying shares in a personal company. If she disposes after 6 April 2026, she'll face an **18% CGT** on the gain under BADR, assuming eligibility. If she sells before that date, she’ll pay 14%, giving a substantial saving.
- *Bob* reorganised share structure in late 2024. Under anti-forestalling rules, if that structuring was aimed at securing lower BADR rates, CGT may be calculated at the rate in effect when the “election” or the qualifying condition ceased. ([gov.uk](https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64175?utm_source=openai))
## Important Precautions
- Ensure disposals qualify under **BADR/Investors’ Relief definitions** (trading company, personal company, long-term share holding, etc.). Non-trading or investment companies may not qualify.
- Be wary of restructuring solely for tax benefit—the anti-forestalling rules restrict those moves.
- Seek professional advice, especially around valuation, timing, and legal eligibility.
## Take-away
The CGT rate rise emphasises urgency in planning business exits or asset disposals. With correct timing, compliance, and strategy, individuals may manage exposure, but delays or misunderstandings could cost substantially more tax.