Business Asset Disposal Relief (BADR) Compliance Check

Why this matters

Business Asset Disposal Relief (BADR) lets qualifying owners pay a reduced rate of Capital Gains Tax on gains from selling all or part of a trading business, selling shares in a personal trading company, or receiving assets on closure of the business. Under the Taxation of Chargeable Gains Act 1992 (sections 169H to 169S) the relief applies to a lifetime limit of £1 million of qualifying gains. The BADR rate was 10% until 5 April 2025, rose to 14% from 6 April 2025 and is 18% from 6 April 2026 — much closer to the 24% main CGT rate on other gains. Anyone planning an exit, sale or retirement based on the old 10% rate may be under-budgeting their tax bill significantly.

Qualifying is strict. For a company sale you must generally be an officer or employee, hold at least 5% of the ordinary share capital with 5% of the voting rights, and meet these conditions throughout the two years before the disposal. The company must be a trading company (or the holding company of a trading group). Relief is not automatic: it must be claimed on your Self Assessment return or by separate claim by the first anniversary of the 31 January following the end of the tax year of the disposal. Getting it wrong can mean an HMRC enquiry, a lost relief claim, and interest and penalties on tax underpaid. HMRC also scrutinises company winding-up arrangements through targeted anti-avoidance rules.

What you'll need

• Details of the business, shares or assets you are selling or closing
• Dates you acquired your interest and your role (officer or employee) in the company
• Your shareholding percentage and voting rights over the last two years
• Any earlier BADR claims you have made against the £1 million lifetime limit

What you'll get

A personalised compliance report covering: a score out of 100, an executive summary, a list of findings ranked by severity, and a prioritised action plan with timeframes.