Last Updated on 25/02/2025 by Adrian Lamb
O’Boyle Accounting and Taxation have experience of setting up new systems to help control costs and monitor spending. Our team consists of good problem solvers and always look at the most practical (cut to the chase!) way to achieve the best results.
Upcoming Changes to Business Asset Disposal Relief (BADR)
Business Asset Disposal Relief (BADR), formerly known as Entrepreneurs’ Relief, is set to undergo significant changes in the coming years. These changes, announced in the 2024 Autumn Budget, will impact the tax savings available to business owners when they sell their shares or exit their businesses.
Current BADR Framework: BADR allows UK taxpayers to pay a reduced Capital Gains Tax (CGT) rate of 10% on the first £1 million of qualifying gains over their lifetime. This relief is available to those who meet specific conditions, such as owning the business assets for at least 24 months and holding at least 5% of the ordinary shares and voting rights in the company
Upcoming Changes:
- April 6, 2025: The CGT rate under BADR will increase from 10% to 14% on the first £1 million of qualifying gains
- April 6, 2026: The rate will rise again from 14% to 18%
Impact on Business Owners: These changes mean that if you sell your business after April 5, 2025, you will pay more in CGT. For example, a £1 million gain would result in a tax bill of £140,000 at the 14% rate, compared to £100,000 at the current 10% rate. From April 6, 2026, the same gain would incur a tax bill of £180,000.
Why Act Now? With these changes on the horizon, it’s crucial for business owners to plan their exit strategies accordingly. Selling your business or shares before the new rates take effect could result in significant tax savings. Consulting with a tax professional can help you navigate these changes and make informed decisions about your business’s future
In summary, the upcoming changes to BADR will increase the CGT rates applied to qualifying gains, making it more important than ever for business owners to plan ahead and seek professional advice to maximize their tax savings.
If you have any specific questions or need further assistance, feel free to ask!
