If you’re planning to sell your business, understanding Business Asset Disposal Relief (BADR) is essential.

In 2026, further changes to BADR mean business owners—especially IFAs—need to carefully consider how these updates could impact the tax they pay on exit.

In this guide, we break down how BADR works, what’s changing, and how to plan a more tax-efficient business sale.

What Is Business Asset Disposal Relief (BADR)?

Business Asset Disposal Relief (BADR) is a UK tax relief that reduces the amount of Capital Gains Tax (CGT) you pay when selling qualifying business assets or shares.

Instead of paying the full CGT rate, currently up to 24% for higher-rate taxpayers—BADR allows you to pay a reduced rate on qualifying gains.

For many business owners, this can significantly increase the amount of money they retain after selling their business.

How BADR Rates Are Changing in 2026

BADR has become less generous over time, and 2026 marks another key shift:

  • 10% rate (pre-April 2025)
  • 14% rate (from April 2025)
  • 18% rate (from 6 April 2026)

This means that business sales completing after 6 April 2026 may be subject to a higher tax rate on qualifying gains.

While BADR still offers a tax advantage versus standard CGT, the benefit is reducing over time, making planning more important than ever.

Watch: BADR 2026 Changes Explained

If you prefer a quick, expert-led breakdown, watch our latest video:
“BADR 2026 Changes: How Business Asset Disposal Relief Now Affects Your Exit”

In this video, Gary Venner, CEO of IFA Acquisitions, explains:

✔ What Business Asset Disposal Relief (BADR) is
✔ How the 2026 tax changes impact your business sale
✔ Who qualifies for BADR
✔ Key considerations when planning your exit

Whether you’re actively planning to sell or just starting to explore your options, this video gives a clear overview of how BADR fits into your exit strategy in 2026 and beyond.

The £1 Million Lifetime Limit

One of the most important features of Business Asset Disposal Relief is the £1 million lifetime limit.

  • This is the total amount of gains you can claim BADR on across your lifetime
  • Any gains above £1 million are taxed at standard CGT rates
  • Once used, the relief cannot be reset or reused

For business owners who have previously sold a company, this limit may already be partially–or fully–used.

A Common Mistake: BADR Doesn’t Apply to All Sales

A frequent misunderstanding is assuming BADR applies to any business-related sale.

However:

  • BADR applies to individuals, not companies
  • It typically applies when you sell shares or dispose of a business personally
  • It does not apply when a limited company sells its own assets

For example:

  • Selling shares in your company → may qualify for BADR
  • A company selling its client bank or assets → does not qualify

Understanding the structure of your sale is critical to ensuring eligibility.

Who Qualifies for BADR?

To qualify for Business Asset Disposal Relief (BADR), you must meet certain conditions:

  • You are disposing of a qualifying business or shares in a trading company
  • You have owned the business or shares for at least two years
  • For limited companies:
  • You hold at least 5% of shares and voting rights
  • You are an employee or director

There are some exceptions (such as EMI schemes), but these are the core rules most business owners must meet.

Why BADR Matters for IFA Firms in 2026

For IFA owners considering a sale, BADR remains highly relevant–even with the reduced benefit.

With the rate increasing to 18% in April 2026, the difference in tax outcomes can be substantial depending on:

  • Timing of the sale
  • Deal structure
  • Eligibility for relief

As tax rules continue to evolve and with ongoing speculation around further changes, early planning is key to protecting the value you’ve built.

Planning a Tax-Efficient Exit

A successful exit strategy isn’t just about finding a buyer, it’s about maximising what you take home.

That means considering:

  • Whether your sale qualifies for Business Asset Disposal Relief
  • How much of your £1m allowance remains
  • The structure and timing of your transaction
  • Potential future changes to CGT or BADR

Even small differences in planning can result in significant changes to your net proceeds.

Final Thoughts

Business Asset Disposal Relief (BADR) continues to play an important role in business exits, but it’s becoming less generous and more complex.

With rates rising and limits tightening, business owners need to take a proactive approach to exit planning.

If you’re considering selling your IFA business, whether now or in the future, understanding how BADR applies to your situation is essential.

FAQ: Business Asset Disposal Relief (BADR)

What is Business Asset Disposal Relief (BADR)?

Business Asset Disposal Relief (BADR) is a UK tax relief that reduces Capital Gains Tax when you sell a qualifying business or shares.

What is the BADR tax rate in 2026?

From 6 April 2026, the BADR rate is set to increase to 18%, up from 14% in 2025.

What is the BADR lifetime limit?

You can claim BADR on up to £1 million of qualifying gains across your lifetime.

Does BADR apply to selling company assets?

No, BADR applies to individuals selling shares or business assets, not when a company sells its own assets.

Who qualifies for Business Asset Disposal Relief?

Typically, you must:
Own at least 5% of shares (for limited companies)
Be a director or employee
Have held the business for at least two years

Is BADR still worth it in 2026?

Yes, despite the rate increase, BADR still offers a lower tax rate than standard CGT, making it valuable for many business owners.

Need Help Planning Your Exit?

At IFA Acquisitions, we specialise in helping financial advisers and business owners plan and execute successful exits.

We offer free, confidential indicative valuations to help you understand your business’s true market position and plan effectively.

Visit: https://www.ifa-acquisitions.co.uk/

Or get in touch with our team today:

Tel : 0208 0044 162
Email : [email protected]

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