Business Asset Disposal Relief: rates and how to claim

What is Business Asset Disposal Relief?

Selling or closing the business? Check what its records are worth before the sale or the liquidation. AI developers now pay for the operational records of companies, such as tickets, work orders, email and chat archives and code (public deals). A free valuation takes six questions about the business and no files.

Business Asset Disposal Relief reduces the amount of Capital Gains Tax on a disposal of qualifying business assets, as long as you have met the qualifying conditions throughout a 2-year period up to the date of the disposal or, in some cases, the date the business ceased. It was previously known as Entrepreneurs' Relief (HMRC helpsheet HS275).

It is a relief for people, not companies. Individuals and some trustees of settlements can claim it; companies cannot, and it is not available where the entire trust is a discretionary settlement. It is not automatic: you have to claim it. Four kinds of disposal can qualify:

• The whole or part of a business you run as a sole trader or in partnership, including assets such as business premises.
• Assets that were in use in a business you have stopped, sold within 3 years after it ceased.
• Shares in, or securities of, your personal company.
• An asset you own personally but let your partnership or personal trading company use, sold alongside a qualifying disposal of your partnership interest or shares (an "associated disposal").
• Not included: assets held as investments, and the letting of property, which does not count as a business for the relief.

Source: HMRC: HS275 Business Asset Disposal Relief (2026)

Business Asset Disposal Relief rates: 10%, 14% and 18%

The rate depends on the date of the disposal. Qualifying gains are taxed at 18% for disposals from 6 April 2026, 14% for disposals between 6 April 2025 and 5 April 2026, and 10% on or before 5 April 2025 (GOV.UK; TCGA 1992, section 169N).

• What 18% means now: a basic-rate taxpayer pays 18% on gains within the basic Income Tax band, and higher and additional rate taxpayers pay 24% (GOV.UK). The relief saves 6 percentage points on qualifying gains that would otherwise be taxed at 24%.
• The order of the calculation: add up the qualifying gains, deduct qualifying losses, then deduct your tax-free allowance. If you also have gains that do not qualify, set the allowance against the gains charged at 24% first (GOV.UK). The allowance is £3,000 (GOV.UK).
• Basic-rate taxpayers use the basic rate band against qualifying gains first, and any band left against other gains, which are taxed at 18% within it and 24% above it.
• Losses: the gains and losses on the assets in one qualifying business disposal are aggregated, and relief applies to the net gain. A loss used this way cannot also be set against other capital gains (HMRC).

Source: GOV.UK: Business Asset Disposal Relief, work out your tax

The BADR lifetime limit: £1 million, falling to £500,000

There is no limit to how many times you can claim the relief, but the total is capped at £1 million over your lifetime (GOV.UK). It is not an annual limit: once your qualifying gains pass it, the excess is taxed at the normal Capital Gains Tax rates (HMRC).

Budget 2026 reduces the limit from £1 million to £500,000 for qualifying disposals made on or after 6 April 2027 (HMRC tax information and impact note; Budget 2026). The new limit takes account of relief claimed on past gains. HMRC estimates that 75% of the approximately 51,000 claimants will be unaffected and about 13,000 individuals will be affected.

• Contracts signed before 6 April 2027 that complete later: anti-forestalling rules apply the £500,000 limit to unconditional contracts entered into before 6 April 2027 and not yet completed, unless the parties can show they did not enter the contract to gain a tax advantage from the timing rule, or, where they are connected, that it was entered into for wholly commercial reasons. A statement is also needed where the gain exceeds £100,000.
• Share exchanges: an election made on or after 6 April 2027 to disapply the share reorganisation rules, in the cases the rules describe, is treated as a disposal at the time of the election, so the £500,000 limit applies.
• Spouses and civil partners are treated separately, and each is entitled to relief up to the lifetime limit if they each meet the conditions (HMRC).
• Keep a record of every gain you have claimed relief on: the limit covers all your claims, in every year.
• Earlier disposals had different limits: £10 million from 6 April 2011 to 10 March 2020, and £1 million for disposals from 11 March 2020.

Source: HMRC: Capital Gains Tax, new Business Asset Disposal Relief lifetime limit (Oct 2026)

Who qualifies for Business Asset Disposal Relief?

The conditions depend on what you dispose of, and they must be met throughout a 2-year qualifying period (GOV.UK; TCGA 1992, section 169I). Before 6 April 2019 the period was 1 year (HMRC).

• Trading company: the company's main activities must be trading rather than non-trading activities like investment, or it must be the holding company of a trading group (GOV.UK).
• Diluted below 5% by a new share issue: you can elect to be treated as having sold and re-bought your shares immediately before the issue, which creates a gain that can qualify, and you can also elect to postpone paying tax on that gain until you sell.
• Joint holdings count proportionately. Civil partners who own 9% of a company jointly and equally are each treated as holding 4.5%, so neither meets the 5% test (HMRC).
• Goodwill sold to your own company: if you sell your business to a close company in which you and any relevant connected person own 5% or more of the ordinary shares, the gain on goodwill does not qualify, although gains on other assets may.
• Rent reduces relief on associated disposals: if the partnership or company paid you rent for the asset, only a just and reasonable proportion of the gain qualifies.

Source: HMRC: HS275 Business Asset Disposal Relief (2026)

BADR on liquidation: closing your company with an MVL

When a solvent company is wound up in a members' voluntary liquidation (MVL), what the liquidator pays out to shareholders is a capital distribution, treated as a disposal of an interest in their shares (TCGA 1992, section 122). The relief is available where the company is wound up and dissolved with your shares being cancelled and a capital distribution is made in the course of that winding up (HMRC). The MVL steps are in how to close a limited company in the UK.

The conditions must be met throughout the 2 years ending with the date of the capital distribution or, if earlier, the date the company ceased to be a trading company, provided the distribution is made within 3 years of that date. In HMRC's example, a director who owned 20% of a company whose trade ceased in August 2023 still qualified on a disposal in September 2025, less than 3 years later. A company left holding cash for longer than that after it stops trading falls outside the window.

There is a catch. Since 6 April 2016 a targeted anti-avoidance rule (TAAR) makes sure that a distribution in a winding up is taxed as income rather than being subject to Capital Gains Tax, when it is used to avoid Income Tax (HMRC). It applies only if all four conditions are met (ITTOIA 2005, section 396B):

• Excluded from the rule: a distribution, or the part of one, that does not exceed the amount that would result in no gain for Capital Gains Tax, and a distribution of irredeemable shares.
• HMRC's target is "phoenixism": winding up a company to receive its undistributed profits as capital, then carrying on the same or a similar activity, often through a newly formed company. HMRC says schemes that claim to get around the rule do not work and that it will investigate attempts to avoid the charge (HMRC Spotlight 47).
• Planning to work in the same field again within 2 years, on your own or through a new company? Take advice before the liquidation starts: that is condition C.
• Striking off instead of liquidating: if you take assets out of the company before it is struck off, you might pay Capital Gains Tax and might get relief, but an amount worth more than £25,000 is treated as income and taxed as Income Tax (GOV.UK). Above that amount, a members' voluntary liquidation is the route in which the liquidator makes capital distributions.
• Further change: Budget 2026 announced reform of how distributions from companies to individual shareholders are taxed, with draft legislation for technical consultation in 2027 and the changes taking effect from April 2028 (Budget 2026).
• If the company cannot pay its debts, the interests of its creditors legally come before those of the directors and shareholders (GOV.UK). See liquidation and administration in the UK.

Source: Income Tax (Trading and Other Income) Act 2005, section 396B (distributions in a winding up)

BADR when you sell your business or company shares

How the relief applies depends on what is sold and who sells it. For a limited company, the choice between the owners selling their shares and the company selling its assets matters, because the relief is available to individuals and some trustees, not to companies (HMRC). For the wider process, see how to sell a business.

• Share sale: you sell your shares in your personal trading company. The gain can qualify if, for at least 2 years up to the sale, you were an officer or employee, the company's main activities were trading and it was your personal company (GOV.UK).
• Asset sale by the company: the company makes the gain, and the relief is not available to companies. It can apply later, when the owners take the proceeds out as a capital distribution in a members' voluntary liquidation within 3 years of the company ceasing to trade (see the section above).
• Sole trader or partnership: the relief covers a disposal of the whole or part of the business, not the sale of individual assets of a business that carries on. A partner who retires and disposes of their whole interest in the partnership's assets can qualify on all of the gains, subject to the lifetime limit.
• Premises you own personally: a sale alongside the business or your shares can qualify as an associated disposal, subject to the rent restriction above.
• Paid in the buyer's shares: an exchange of shares may not count as a disposal of the original shares. If you would have qualified at the time of the exchange, you can elect to be treated as disposing of your shares then and claim the relief, but the election must cover all of the shares and be made in writing by the claim deadline (HMRC).
• Several sales: you can claim each time, with every claim counted against the same lifetime limit. HMRC's example: £600,000 relieved on a 2019 sale leaves £400,000 of the £1 million limit for a later one (HMRC).

Source: GOV.UK: Business Asset Disposal Relief, eligibility

How much tax does BADR save? A worked illustration

This is plain arithmetic using the published rates, not advice for your case. It assumes a higher-rate taxpayer selling shares that qualify in full, with no other gains or losses and no earlier claims; the 18% BADR rate and the 24% higher rate (GOV.UK); and the £3,000 tax-free allowance for the 2026 to 2027 tax year (GOV.UK). The last column applies the £500,000 limit announced for disposals from 6 April 2027 and assumes the rates and allowance stay the same.

• The saving is 6% of the gain the relief covers: £60,000 on £1 million and £30,000 on £500,000. That is why a sale that could complete either side of 6 April 2027 is worth timing with your accountant, within the anti-forestalling rules above.
• HMRC's helpsheet works through its own cases, including a business sold for gains of £1,325,000 in May 2025, of which £1 million qualified and £325,000 was taxed at the normal rate (HMRC).

Source: GOV.UK: Business Asset Disposal Relief, work out your tax

How to claim Business Asset Disposal Relief, and the deadline

Claim through your Self Assessment tax return, or by filling in Section A of the Business Asset Disposal Relief claim form that goes with helpsheet HS275 (GOV.UK; HS275 and claim form). HMRC says to claim in the tax return for the year if you can, and otherwise in writing or on the form (HMRC).

The deadline is the first anniversary of the 31 January following the end of the tax year in which the disposal takes place. A claim may be amended or revoked within that time.

• Reporting the gain: gains that are not on UK residential property go in a Self Assessment tax return or through the real-time Capital Gains Tax service. With the real-time service you report by 31 December in the tax year after the gain and pay by 31 January: for a gain in 2025 to 2026, report by 31 December 2026 and pay by 31 January 2027. If you are registered for Self Assessment, include the sale in your tax return as well (GOV.UK).
• What you need: what you paid for the asset and sold it for, the dates you acquired and disposed of it, costs such as buying, selling or improvements, any reliefs, and a calculation for each gain or loss (GOV.UK).
• Keep a record of earlier claims, because the lifetime limit counts all of them.
• Not a straightforward case? HMRC's helpsheet covers straightforward scenarios and suggests a qualified tax adviser where your circumstances are more complex.

Source: GOV.UK: Business Asset Disposal Relief, how to claim

Before you sell or liquidate, check what the records are worth

A sale or a liquidation is often the last time anyone looks at the company's systems as a whole. Support tickets, work orders, email and chat archives and code repositories can sometimes be licensed to AI developers before the sale or the closure; AI labs are buying data from dead startups to train their models, MIT Technology Review reported in October 2026.

Checking takes minutes: see what your company's records are worth from six questions about the business, before the sale agreement is signed or the liquidator is appointed.

• Tax: how a licence fee is taxed, and how it fits with your relief claim, depends on your circumstances. That is a question for your accountant before anything is signed.
• Selling: agree with the buyer whether any records licence happens before completion and who receives the fee. See licensing company data when selling a business.
• Liquidating: when the liquidator is appointed they take control of the company (GOV.UK), so raise the records with them early. Money from licensing records is company money and goes through the liquidation like any other proceeds.
• Privacy: these archives hold staff and customer personal data. See licensing company data under UK GDPR and how to de-identify company data. Suppliers scrub personally identifiable information and exclude HR records, according to MIT Technology Review.
• Describe what you hold at company level: the systems, years covered and approximate volume. The data inventory template gives the columns, the deals tracker lists public prices as reported, and selling company data in the UK covers the UK specifics. Already closed? See selling company data after closing.

Source: MIT Technology Review: AI labs buying data from dead startups (Oct 2026)

Next step

Work out which disposal you are making: a sale of the business, a sale of shares or a distribution in a liquidation. Check the 2-year conditions and the 3-year window against your own dates, and note whether the disposal falls before or after 6 April 2027, when the lifetime limit drops to £500,000. If the company holds years of tickets, work orders, chat or code, describe them before the sale or the liquidation; no export is needed to find out whether they are worth licensing.

Origin Data Partners is independent and is not affiliated with any AI data buyer. We help owners compare buyers and find the best fit for their records. See what your data is worth.