Business Asset Disposal Relief in 2025: Are You Still Eligible?

Published by RJP LLP – Chartered Certified Accountants and Tax Advisers

If you’re planning to sell your business, liquidate a company, or transfer shares in 2025, one of the most valuable tax reliefs available is Business Asset Disposal Relief (BADR) — formerly known as Entrepreneurs’ Relief.

BADR enables you to pay just 14% capital gains tax (CGT) on qualifying business disposals, up to a lifetime limit of £1 million in gains. But with the rules tightening over recent years — an increase in the rate to 18% with effect from 6th April 2026, and further changes possible — many business owners are asking: Am I still eligible?

At RJP LLP, our team of chartered certified accountants regularly advise on exit planning and can help you understand your position and options.

What Is Business Asset Disposal Relief?

In the current tax year to 5th April 2026, BADR reduces the rate of capital gains tax to 14% (18% with effect from 6th April 2026) on the sale or disposal of qualifying business assets, such as:
• A trading business (as a sole trader or partnership)
• Shares in a trading company (typically your own)
• Assets used in a business that has ceased.

The key benefit? Significant tax savings — especially compared to the standard CGT rate of 24% for higher rate taxpayers.

Who Is Eligible for BADR in 2025?

To qualify for BADR, the disposal must meet specific conditions for at least two years prior to the sale. The main requirements are:

For Shareholders in a Company:

• You must be an employee or officer (director) of the company
• You must hold at least 5% of the shares and voting rights
• The company must be a trading company (or the holding company of a trading group)
• You must have held the shares for at least 24 months before disposal

For Sole Traders and Business Owners:

• You must have owned the business for at least 24 months
• You must be selling the whole or part of the business as a going concern

Common Traps That Can Block Eligibility

Many business owners unintentionally miss out on BADR due to structural issues or timing errors. Common pitfalls include:

• Holding non-voting or growth shares that don’t meet the 5% test
• Company involved in non-trading activities (e.g. property investment)
• Not being officially listed as a director or employee
• Shares held for less than 24 months after a restructure

If you’re searching for whether you still claim BADR when liquidating your company then our recent article could help.

At RJP LLP, we often help clients restructure their company or shareholdings to ensure BADR eligibility is preserved ahead of a planned sale or liquidation.

Could the Rules Change in the Next Budget?

BADR has already been significantly curtailed — the lifetime gains limit was reduced from £10 million to £1 million in 2020, and the rate of tax was increased from 10% to 14% on 6 April 2025, and will be further increasing to 18% on 6 April 2027. There is ongoing speculation that:

• The relief may be abolished entirely in a future Budget
• Capital gains tax rates could be aligned with income tax
• Further restrictions could be introduced

If you’re considering selling your business in the next 1–2 years, it’s worth reviewing your eligibility now while BADR remains available at the lower rate.

RJP LLP Can Help You Plan Ahead

Whether you’re:

• Selling your business or company shares
• Planning an MVL (Members’ Voluntary Liquidation)
• Restructuring your shareholdings before a sale

…we can help ensure you qualify for BADR and don’t miss out on valuable tax savings.

Contact us via partners@rjp.co.uk to book a BADR review with our tax specialists

Don’t leave it to chance — understanding your eligibility for BADR can save you tens of thousands in tax. Let’s get it right before you make your next move.

RJP LLP are Chartered Certified Accountants and Tax Advisers specialising in tax planning, business sales, and company exits for entrepreneurs and owner-managed businesses across London and the South East.