Business asset disposal relief

Business asset disposal relief (BADR) can reduce the rate of capital gains tax (CGT) payable on a gain from 28 per cent to just 10 per cent. Advance planning is vital to help avoid costly mistakes when selling a business, business assets or shares in a trading company.

Typically a disposal will be a sale, but BADR can also apply to other types of disposal, such as gifts of business assets.

Ordinarily, CGT is payable at rates of 18 per cent and 28 per cent on gains. If the qualifying conditions for BADR are met, the rate is reduced to 10 per cent. If you use your full, lifetime BADR allowance, this can result in a very valuable tax saving of £180k per person. Claims can be made by both individuals and, where assets are held within a trust, by the trustees. 

There are various qualifying conditions that you and your business have to meet. To identify any pitfalls, RSM can review the position in advance of a sale. We will then recommend actions you can take to ensure a successful claim. You may need to undertake certain actions a year or more before the sale, so forward planning is essential when planning such a transaction.

Timing is key. In fact, the order of the linked transactions can be vital, and being a couple of days out in the timing can result in the failure of your whole BADR claim. RSM can review legal contracts in advance of the disposal to ensure that this does not happen and that valuable relief is not lost.

Once the transaction has been completed, we will look at your objectives for the funds and help you to identify your future tax strategy. This may include income tax and inheritance tax planning to ensure that your overall wealth objectives are met.

Please do not hesitate to contact our advisers to find out how our services could help you benefit from BADR.

Keep up-to-date with the latest insights and events

How regularly do you review your TAX AFFAirs?

Our private client compass helps you navigate through the tax landscape.

Read more