Business Asset Disposal Relief: What Changes in April 2026

Business Asset Disposal Relief, still referred to by some advisers as Entrepreneurs' Relief, provides a reduced rate of Capital Gains Tax on qualifying business disposals. From 6 April 2026, the rate rises from 14 per cent to 18 per cent. For HVAC business owners who are at or near the point of considering a sale, the tax implications are significant and time-sensitive.

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 the October 2024 Budget, when it was increased to 14 per cent with effect from 30 October 2024. The Budget confirmed a further increase to 18 per cent from 6 April 2026. This phased approach is confirmed in legislation, and there is no indication that the April 2026 increase will be reversed or delayed.

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 from a sale completing before 6 April 2026 versus after is real and material.

What You Need to Complete Before 6 April 2026

To benefit from the 14 per cent rate, the sale must complete before 6 April 2026. An exchange of contracts before that date is not sufficient: the completion date is what HMRC will look at. Given that a well-run HVAC business sale process takes four to six months from initial market engagement to completion, a business owner who begins the process in February 2026 is highly unlikely to complete before the deadline.

A sale that began its process in late 2025 and is currently in the legal phase may be in a position to complete in time. If you are in that situation, the priority is to keep the legal process moving and to take advice from your accountant and solicitor on whether completion before 6 April 2026 is achievable.

For business owners who are in the earlier stages of considering a sale, the BADR deadline does not disappear on 6 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 confidential valuation. We can help you understand your timeline, your valuation range, and how the tax position affects your decision.