Business Asset Disposal Relief: What Changed in April 2026

Business Asset Disposal Relief, still referred to by some advisers as Entrepreneurs' Relief, provides a reduced rate of Capital Gains Tax, the tax on the gain you make when you sell, on qualifying business disposals. In Apr 2026, the tax rate under it went up from 14 per cent to 18 per cent, so qualifying owners now keep less of a sale. For HVAC business owners who are at or near the point of considering a sale, the tax implications are significant.

Update, November 2026. The October 2026 Budget announced that the Business Asset Disposal Relief lifetime limit will fall from £1 million to £500,000 for qualifying disposals from the start of the 2027 to 2028 tax year in April 2027. Relief already claimed counts towards the limit, and the 18% rate does not change. For tax, the date of an unconditional contract normally counts as the date of disposal rather than completion, and specific rules will apply to contracts signed before the change that complete after it. Where this page quotes a different limit, rate or date, this note takes priority. Take advice on your own position. What the change means for owners.

What Business Asset Disposal Relief Does

When you sell a qualifying business or business assets, any gain above your annual CGT exemption is usually subject to Capital Gains Tax. Without BADR, the standard rate for higher-rate taxpayers is 24 per cent (as of the 2025/26 tax year). BADR reduces this to a lower rate on the first £1 million of qualifying lifetime gains.

The rate history is important context. BADR was 10 per cent until Apr 2025: the October 2024 Budget raised it to 14 per cent from Apr 2025, and set a further increase to 18 per cent, which took effect in Apr 2026 as legislated.

The Numbers

On a qualifying gain of £500,000, the difference between the 14 per cent rate and the 18 per cent rate is £20,000 in additional tax. On a £750,000 gain, the additional cost is £30,000. On a £1 million gain (the BADR lifetime limit), the additional tax is £40,000.

These are not trivial sums. For an HVAC business owner who has spent 10 or 20 years building the business, the difference in take-home proceeds between a sale that completed before April 2026 and one completing now is real and material.

What You Need to Complete Before April 2026

To benefit from the 14 per cent rate, a sale had to complete before April 2026. Because of rules brought in to stop owners signing early just to keep a lower rate, exchanging contracts, the point both sides sign and are committed, before that date was not normally enough: for most deals HMRC looked at when the sale completed. Given that a well-run HVAC business sale process takes four to six months from initial market engagement to completion, a business owner who began the process in February 2026 was highly unlikely to complete before the change.

A sale that began its process in late 2025 and was in the legal phase by February may have completed in time, and for those sales the priority was to keep the legal process moving, with advice from an accountant and solicitor on whether completion before April 2026 was achievable.

For business owners who are in the earlier stages of considering a sale, BADR did not disappear in April 2026. The 18 per cent rate is still substantially better than the standard 24 per cent CGT rate. The correct approach is to take independent tax advice, understand your personal position, and decide whether your sale timeline is affected by the rate change.

BADR Qualifying Conditions

It is worth confirming that BADR applies to your specific situation, as the qualifying conditions are specific. For a sole trader or partnership business, you must have owned the business for at least two years before the disposal. For a company, you must be an employee or office holder, own at least 5 per cent of ordinary shares, and have held this position for at least two years.

There are additional conditions relating to associated disposals and personal use of assets. Your accountant will be able to confirm your eligibility and advise on the most tax-efficient structure for your sale.

If you are considering your options, start with a free calculator. We can help you understand your timeline, your valuation range, and how the tax position affects your decision.

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