Business Asset Disposal Relief (BADR)
UK tax glossary · Last reviewed: April 2026
Business Asset Disposal Relief (BADR), formerly Entrepreneurs' Relief, taxes qualifying gains from business disposals at a preferential rate of 14% (2025/26) and 18% from April 2026, rather than the standard 24%. The lifetime limit on qualifying gains is £1 million.
To qualify, you must have been a sole trader or business partner for at least two years, or held at least 5% of shares and voting rights in a personal company and been employed by it for at least two years. You must also have owned the business (or shares) throughout the two years ending on the disposal date.
BADR is particularly valuable for business owners selling a company or retiring from a partnership. At the £1 million limit, the tax saving compared to the standard higher rate (24%) is up to £100,000. The relief is claimed via Self Assessment.
Worked example
Sole trader sells business: total gain £600,000. BADR rate 2026/27: 18%. BADR tax: £600,000 × 18% = £108,000. Without BADR (higher rate 24%): £144,000. Saving: £36,000.
Common questions
Does the BADR lifetime limit reset if I start a new business?
No. The £1 million lifetime limit is cumulative across all disposals throughout your lifetime. Once used, you cannot claim further BADR even on a new business.
Can I claim BADR on goodwill when I incorporate my sole trade?
No. Goodwill transferred to a related company on incorporation does not qualify for BADR. This restriction was introduced in 2015 and applies where the vendor and company are connected.
Related resources
TaxHelper provides general information based on published HMRC rates and guidance. It is not regulated financial or tax advice. For decisions involving significant sums, complex circumstances, or if you are unsure, speak to a qualified accountant or HMRC directly.