If you’re planning to sell a business, shares in a trading company or business assets, it’s essential to plan ahead. This will help you enjoy more of your profits and minimise the tax burden.

Business asset disposal relief (BADR) can reduce the rate of capital gains tax (CGT) you pay. For qualifying lifetime gains of up to £1m, you can use BADR to cut your tax from 20% to 10%. 

BADR most commonly applies to sales. However, it can also be used to make gifts or other transfers of business assets more tax efficient. 

Maximising relief 

Usually, you’ll need to pay 20% CGT on gains that come from business assets. If you qualify for BADR, the rate is reduced to 10% up to the lifetime limit of £1m. If you use your full lifetime BADR allowance, you could save up to £100,000 in tax. 

Claims can be made by individuals or by trustees, if the assets are held within a trust. With careful planning, you can maximise tax relief opportunities across multiple individuals and family trusts. 

How we can help

You and your business need to meet a number of conditions to qualify for BADR on a sale. Our experts can review the position before you decide to sell and recommend what you should do to secure maximum tax relief. 

You’ll need to seek advice and take action at least two years before you plan to sell. This is because you must meet the conditions for BADR for at least two years to qualify for relief.  

Once you’ve established that you can claim relief, it’s important to make sure you don’t lose your right to BADR. This could happen if you change your role, what your company does or who owns the business. 

Once it’s time to sell, make sure you don't choose a sale structure that stops you claiming BADR. We can review legal contracts before the disposal to make sure this valuable relief is protected.

Once the transaction has been completed, we’ll look at your objectives for the funds and help you create your future wealth strategy. This may include income tax and inheritance tax planning to make sure you can enjoy and pass on your wealth in line with your goals. 

Get in touch with our advisers to find out how our services could help you benefit from BADR.

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