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Entitlement to Business asset disposal relief

22 February 2024

Benefit from Business Asset Disposal Relief (BADR) for a 10% Capital Gains Tax on business exits, subject to qualifying conditions. Lifetime limit of £1m offers multiple relief opportunities. Conditions and rules apply.

Business Asset Disposal Relief (BADR) applies to the sale of a business, shares in a trading company or an individual’s interest in a trading partnership. If it is available sellers can benefit from a 10% tax charge on exit from their business if BADR is available. When the relief is available Capital Gains Tax (CGT) of 10% is payable in place of the standard rate.

There are a number of qualifying conditions that must be met in order to qualify for the relief. Both of the following must apply for at least two years up to the date you sell your shares:

  • you are an employee or office holder of the company (or one in the same group); and
  • the company’s main activities are in trading (rather than non-trading activities) – or it is the holding company of a trading group.

There are also other rules depending on whether or not the shares are part of an Enterprise Management Incentive (EMI) scheme.

BADR used to be known as Entrepreneurs’ Relief before 6 April 2020. The name change did not affect the operation of the relief.

You can currently claim a total of £1 million in BADR over your lifetime. The £1m lifetime limit means you can qualify for the relief more than once. The lifetime limit may be higher if you sold assets before 11 March 2020.

Source: HM Revenue & Customs Mon, 19 Feb 2024 00:00:00 +0100

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