Business Asset Disposal Relief (BADR) is tax relief which lowers Capital Gains Tax when disposing of an asset. BADR was previously known as Entrepreneurs Relief (ER).
What is Business Asset Disposal Relief (BADR)?
BADR reduces the amount of Capital Gains Tax that's due, by giving tax relief. Capital Gains Tax is essentially a tax that you pay on any profits that you make when you dispose of an asset. That profit is a ‘gain’, so CGT is a tax on the gain that you make.
What does disposal of an asset mean?
Disposing of a business asset can mean an asset is sold, given away, or swapped for something. It might also mean:
That you’re disposing of a business or shares at the end of ownership, or closure of a limited company
The asset has been stolen or damaged, and you’ve been compensated for its loss, such as with an insurance payment.
Can I claim BADR?
Business Asset Disposal Relief (BADR) is only available to individuals operating a business and disposing of a business asset. This disposal may be the sale of an entire business, or the sale of shares.
An asset disposal qualifies for BADR where the asset is either the entire business, part of the business, or shares.
BADR is only available to individuals who own their business or shares in a company. It doesn’t apply to companies in general, so a company can’t apply for relief using BADR.
Capital Gains Tax if you claim BADR
With BADR, you'll pay Capital Gains Tax at a rate of 10% on any gains made from disposing of qualifying business assets.
The lifetime allowance of Business Asset Disposal Relief
BADR claims have a lifetime limit of £1 million. The lifetime limit doesn’t affect how many times you can use BADR.
What is the BADR deadline?
You can make eligible claims until one year on from 31st January, following the end of the tax year.
Learn more about BADR in our article. Or, find out more about our online accounting services, including tax relief support and call 020 3355 4047.