Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) - Wilson Partners
“Having an enthusiastic partner to act as a sounding board has proved invaluable when floating new ideas to grow our business. For us it’s imperative we get not only sound accounting advice, but good business planning and strategy expertise.”

Adrian Powell, Active Facilities Management Ltd

Adrian Powell.
What we do > SMEs > Business Tax > Business Asset Disposal Relief (formerly Entrepreneurs’ Relief)

Business Asset Disposal Relief (formerly Entrepreneurs’ Relief)

Entrepreneurs’ relief was renamed Business Asset Disposal Relief (BADR) for the 2020/21 tax year onwards.

Business Asset Disposal Relief can allow you to pay a lower rate of capital gains tax (CGT) when you sell your business. If BADR applies, the rate of CGT is reduced to 10%. Individuals have a lifetime limit of £1 million of gains for which BADR can be claimed.

It is vital, for BADR to apply, that the qualifying conditions are met. Given the substantial tax savings involved, it is vital that you organise your business and its sale so that you qualify for BADR.

It’s easy to assume that you are entitled to BADR. However there are sometimes issues that can throw this assumption into doubt and it can be a very costly if you happen to get a different tax treatment. Nine times out of ten there are no issues but you have to make sure that you’re not the one in ten.

At Wilson Partners, our tax team spends a lot of our time advising clients on their eligibility for BADR as well as planning ahead to ensure that the conditions are met where they can be.

If you’re looking to sell your business talk to us today to make sure you don’t get taxed unnecessarily.

See our tax case studies to find out more about how we can help you with BAD relief (formerly Entrepreneurs' Relief)Did you know we can value your business for you? Click here for more information and to find out what your business might be worth

FAQs

It reduces the rate of CGT payable on qualifying disposals to 10%. An individual may claim BADR up to £1m of qualifying capital gains – this is a lifetime limit. 

There’s no limit to how many times you can claim Business Asset Disposal Relief. However, under current legislation, you can claim a total of £1 million in BADR over your lifetime. However, it is possible that you may be able to claim more if you sold your assets before 11 March 2020. Please contact us for more information.  

You must meet the ‘personal company’ test for at least 2 years before you dispose of your shares. The test will effectively need to confirm that you owned at least 5% of the shares and voting rights in the two years prior to the disposal. 

There are three types of ‘business asset‘ which may qualify for relief. They are: Whole or part of a sole trade or partnership business. An asset used in a business at the time the business ceases to be carried on. Shares or securities (for example loan stock) in a company. 

It’s important to consider that the main requirement for the relief isn’t merely the sale of business assets.  

Additional requirements: 

  • Part or whole sale of a business that had been owned through the two-year period leading up to the date of disposal, or 
  • The disposal of businesses assets within three years after the sale of a business that had been owned through the two-year period leading up to the date of disposal, or 
  • The disposal of an asset used by a partnership or company where the disposal is associated with a disposal of partnership assets or company shares which too qualifies for BADR, or 
  • Share are required to have been held for a minimum of 24 months before BADR can be claimed on their disposal 
  • If you’re selling all or part of your business 
  • If you’re selling shares or securities  
  • If you’re selling assets you lent to the business 
  • If you’re a trustee selling assets held in the trust 

Contact us to discuss your situation. 

(Assuming annual exempt amount has already been used) 

  Profit from selling the business  Capital Gains Tax with no BADR (20%)  Capital Gains Tax with BADR claim (10%) 
Director/shareholder A 

 

£250,000  £50,000  £25,000 
Director/shareholder B 

 

£250,000  £50,000  £25,000 
Total  £500,000  £100,000  £50,000 

 

Tax eNews:

Well if a week is a long time in politics, well then the month since our last newsletter has been ample time to announce a general election and see the main parties hot on the campaign trail.

Read More

Latest blog:

Can you imagine waiting for 800 years for an appointment? How about 30,000 days or 7 million hours? That’s how long, collectively, taxpayers reported waiting for an HMRC advisor in the 2023-24 tax year.

Read More

Download:

Download our free eBook – The 7 pillars of business success

Read our free guide what you need to focus on to help you make better decisions and achieve your goals quicker.

Read More

Latest News:

We're proud to announce that Tom Bradbury and Paul Hyde have been recognised in this year's 35 under 35 awards.

Read More

Latest blog:

Meet keen golfer and dog lover Tyron, Senior Manager within the Corporate Finance Team.

Read More

Join the team

If you have the energy, mindset and drive to work in an accountancy firm that wants to do things just a little bit differently, then we’d love to hear from you.

Read More

It’s all about the people! We work hard to maintain our unique culture and recruit those who share our passion for client service, the value we can add to those around us and our never-ending quest to develop ourselves and our clients.

You may also be interested in...

Who we are, abstract image of businessmen with shadows.

Who we are

We are Wilson Partners. We combine the financial expertise, experience and accessibility of our talented team with a deep understanding of our clients to help achieve their goals.

Read More

Awake at Night Featured Image

What’s keeping you awake at night?

Running your own business is no mean feat. It can literally become your life and if you’re not careful, that can have you questioning the very reasons you went into business in the first place.

Read More

Thinking Business Featured Image

Our aim is to deliver the highest quality content to help existing and aspiring business leaders to reach their goals quicker. Material is generated primarily by our own team of experts.

More

Call us on 01628 770 770 for a no-obligation chat