BADR Calculator 2026/27
Last updated: March 2026 — BADR rate 14% until 5 April 2026, then 18%
Selling your UK limited company? Business Asset Disposal Relief (BADR) reduces the Capital Gains Tax rate on qualifying gains — but the rate rises from 14% to 18% on 6 April 2026. Enter your figures below to calculate your CGT bill and see exactly how much you save by completing your exit before the deadline.
This calculator provides estimates only and does not constitute tax or financial advice. BADR eligibility requires meeting strict conditions — minimum 5% shares, 2+ years as officer or employee, business qualifying as a trading company. Consult a qualified tax adviser before making exit decisions.
How Business Asset Disposal Relief Works
When you sell a qualifying business or shares in your company, BADR replaces the standard Capital Gains Tax rates (18% basic / 24% higher) with a reduced flat rate. From April 2025 that rate is 14%; from April 2026 it rises to 18%. Each individual has a lifetime limit of £1,000,000 of qualifying gains — after that, standard CGT rates apply.
Before calculating CGT you deduct your annual CGT exemption of £3,000 from the gain. The relief then applies to any gains up to your remaining lifetime allowance. Any excess is taxed at the standard CGT rate (18% if you have remaining basic-rate band, 24% otherwise).
| Tax Year | BADR Rate | Standard CGT (basic) | Standard CGT (higher) | Lifetime Limit |
|---|---|---|---|---|
| Up to 5 April 2025 | 10% | 18% | 24% | £1,000,000 |
| 6 April 2025 – 5 April 2026 | 14% | 18% | 24% | £1,000,000 |
| 6 April 2026 onwards | 18% | 18% | 24% | £1,000,000 |
BADR Qualifying Conditions
BADR applies to the disposal of all or part of a trading business, or shares in a personal company. For shares you must meet all three conditions throughout the 2 years before the disposal date:
- 1
5% shares and voting rights
You must hold at least 5% of the ordinary share capital and 5% of the voting rights in the company.
- 2
Officer or employee
You must be a director, company secretary, or employee of the company (or group). A non-employed shareholder does not qualify for BADR — see Investors' Relief instead.
- 3
Trading company
The company must be a trading company (or the holding company of a trading group) — not a shell, investment company, or property investment company. HMRC checks that trading activities are not 'substantial' investment activities.
- 4
2-year qualifying period
All conditions above must have been met for a continuous period of at least 2 years ending on the disposal date (or the date the company ceased trading, if within the previous 3 years).
Tax Planning Strategies for a Business Exit
Accelerate completion before 5 April 2026
The single biggest tax saving available right now. Completing exchange and completion before 5 April 2026 locks in the 14% BADR rate. On a £1m qualifying gain that saves £40,000 compared to completing after 6 April 2026.
Use a Members' Voluntary Liquidation (MVL)
An MVL distributes company reserves as capital rather than income, allowing BADR to apply. It is typically cost-effective when reserves exceed approximately £35,000 and all shareholders qualify for BADR.
Maximise employer pension contributions before exit
Making employer pension contributions before completion reduces the company's distributable profits and can reduce the effective gain if you are extracting accumulated reserves.
Holdover or defer via EIS/SEIS reinvestment
Reinvesting proceeds into an EIS-qualifying company within 3 years can defer CGT on the gain. Combined with BADR, this can significantly reduce the immediate tax charge.
Spousal share transfer before disposal
Transferring shares to a spouse before the sale allows the gain to be split between two individuals, each with their own £3,000 annual exemption and potentially their own BADR lifetime allowance.
Ensure the 2-year window is met
If you have been a director/employee for less than 2 years, consider whether the qualifying period can be met before exchanging contracts — even a short delay may unlock the full BADR rate.
Tax planning around a business exit is complex and the right approach depends on your specific circumstances. Always consult a specialist M&A tax adviser or chartered accountant before making disposal decisions.
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Frequently Asked Questions
What is Business Asset Disposal Relief (BADR)?▾
Business Asset Disposal Relief (formerly Entrepreneurs' Relief) is a UK Capital Gains Tax relief that reduces the CGT rate on qualifying business disposals. For the 2025/26 tax year the BADR rate is 14%, rising to 18% from 6 April 2026. The lifetime limit is £1,000,000 of qualifying gains per individual.
How much CGT will I pay when I sell my company?▾
If BADR applies, you pay 14% CGT on qualifying gains up to £1,000,000 (if sold before 6 April 2026) or 18% thereafter. Gains above the BADR lifetime limit are taxed at the standard CGT rates of 18% (basic rate) or 24% (higher rate). You also deduct the annual CGT exemption of £3,000 before calculating tax.
What are the BADR qualifying conditions?▾
To qualify for BADR you must: (1) own at least 5% of the ordinary shares and 5% of voting rights; (2) have been an officer or employee of the company throughout the 2 years before disposal; (3) the company must be a trading company (or holding company of a trading group) throughout those 2 years. Disposals of qualifying assets of an unincorporated business also qualify.
Why is the BADR rate increasing to 18% in April 2026?▾
The Chancellor announced in the October 2024 Autumn Budget that BADR would increase in two steps: from 10% to 14% on 6 April 2025, and from 14% to 18% on 6 April 2026. The 18% rate aligns BADR with the standard basic-rate CGT rate for other assets, so the relief narrows over time.
How much do I save by selling before 6 April 2026?▾
Exiting before 6 April 2026 saves you 4 percentage points on your BADR-qualifying gain. On a £500,000 qualifying gain that is £20,000; on the full £1,000,000 lifetime limit it is £40,000. Use the calculator above to model your exact saving based on your specific proceeds and costs.
What is the BADR lifetime limit?▾
Each individual has a £1,000,000 lifetime BADR limit — that is the total gains (not proceeds) on which they can ever claim BADR. If you have used part of your allowance in previous disposals, the remaining balance reduces accordingly. Gains above the lifetime limit are taxed at standard CGT rates.
Can I claim BADR on shares I have held for less than 2 years?▾
No. BADR requires that the qualifying conditions (5%+ shares, officer or employee status, trading company) have been met for at least the 2 years immediately before the disposal. Shares held for less than 2 years do not qualify, though you can still benefit from the £3,000 annual CGT exemption and standard CGT rates.
What is the difference between BADR and Investors' Relief?▾
BADR applies to working shareholders — people who own 5%+ shares and are officers or employees. Investors' Relief applies to external investors (not officers or employees) who subscribed for shares in unlisted trading companies. Investors' Relief has a separate £10 million lifetime limit and currently also carries an 18% rate (matching BADR from April 2026).