If you've built and sold a business in the UK, there was a long stretch when the tax on the first slice of your gain felt almost gentle: 10%, under a relief most people still call Entrepreneurs' Relief. That rate has been climbing. Renamed Business Asset Disposal Relief, it went to 14% in the 2025/26 tax year, and from 6 April 2026 it charges 18%. The relief is still there; it just does less of the work it used to.
For the reader who sells a company and then turns to angel investing - a common path, and the one this newsletter is written for - the change matters at the moment of exit. Here's what BADR is, how the rate got to 18%, who actually qualifies, and what a higher bill means for the proceeds you'll have to deploy.
The relief survived three Budgets. The discount it gives you didn't.
What Business Asset Disposal Relief is
Business Asset Disposal Relief, or BADR, is a reduced rate of capital gains tax on qualifying disposals of a business or of shares in your own trading company. Sell the qualifying asset and the gain that falls within the relief is taxed at the BADR rate rather than the standard CGT rate that would otherwise apply.
If the name is new to you, the relief isn't. BADR is the renamed Entrepreneurs' Relief - same relief, new label since 2020. So guidance, accountants and older articles that talk about Entrepreneurs' Relief are describing the thing now called BADR. HMRC's current page sits under the BADR name: see the GOV.UK guidance on Business Asset Disposal Relief.
One point to fix early, because it's the source of a lot of confusion. BADR is a capital gains relief on selling a business you own and run. It is not one of the venture scheme reliefs you get for putting money into early-stage companies. SEIS and EIS sit in a separate part of the tax code, with their own rules, which the next-to-last section comes back to.
How the rate got to 18%, and the £1m cap
The headline change for 2026 is the rate. BADR used to charge a flat 10% on qualifying gains, well below the standard CGT rate. That changed in stages. The rate rose to 14% for the 2025/26 tax year, and from 6 April 2026 it is 18%. The table above lays the three steps out.
So the relief still gives you a discount on a qualifying sale, but a smaller one than the operator who sold a year or two earlier received. At 10% the saving against the standard rate was sizeable; at 18% the gap has narrowed considerably, and the planning value of BADR has fallen with it.
The other number that decides how much BADR is worth to you is the £1,000,000 lifetime limit. The reduced rate applies to a running total of £1m of qualifying gains across your lifetime, not per disposal and not per year. Gains beyond that ceiling are taxed at the standard CGT rate. If you've claimed the relief on an earlier sale, that earlier claim has already used part - or all - of the £1m allowance.
Who qualifies for BADR
BADR is targeted, and the tests are what keep it aimed at genuine owner-operators rather than passive shareholders. Broadly, to claim it on a disposal of company shares you need three things to hold:
- A 5%+ holding. You generally need to hold at least 5% of the ordinary share capital and voting rights, with a corresponding entitlement to profits and assets - a meaningful stake, not a token one.
- To be an officer or employee. You need to be a director, another officer, or an employee of the company (or of a company in the same group). BADR is for people who run the business, not arm's-length investors.
- A two-year qualifying period. Those conditions broadly need to have been met throughout the two years up to the sale. A stake you've held briefly, or in a company you don't work in, won't clear the bar.
That shape matters for the angel reader. A passive minority position in a startup you've backed will not normally qualify for BADR - the relief is built for founders and operator-shareholders selling the company they helped run. The detailed conditions carry edge cases, so confirm the current tests against the GOV.UK guidance before relying on them.
What the rise means for a founder turning angel
For someone selling a qualifying business and then moving into angel investing, the practical effect is plain: the tax on the relieved part of your gain is higher than it would have been before April 2026, so the after-tax proceeds you walk away with are smaller for the same sale price. On a gain that uses the full £1m allowance, the move from 10% to 18% is a real difference in the cash you keep.
That feeds straight into what you have to deploy afterwards. If your plan was to sell and then put capital into early-stage companies, the pot is a little lighter than the old maths suggested, and it's worth running the sums on today's rate rather than a remembered one.
It's also where the venture schemes re-enter the picture, though as a separate matter. A capital gain - including one from a business sale - can in principle be deferred into an EIS investment under EIS capital gains deferral relief: the gain is postponed rather than taxed now, provided the EIS conditions are met. That is a distinct relief with its own rules and timing, and it isn't a recommendation to make any particular investment - it's simply a feature worth knowing exists when you're weighing what to do with sale proceeds. We cover the mechanics separately.
A note on what this isn't
This is an explainer, not a steer on whether, when or how to sell anything. BADR's rate, its £1m lifetime limit and its qualifying tests all change with Budgets and turn on the specifics of your shareholding, your role and your timing - the climb from 10% to 18% over a couple of years is the proof that none of it is fixed. Whether BADR applies to a given sale, and how it interacts with the venture scheme reliefs, depends entirely on your circumstances. Confirm the current rules in HMRC's guidance on Business Asset Disposal Relief and take FCA-regulated advice before you act on a disposal.
Frequently asked questions
What is the BADR rate in 2026?
From 6 April 2026, Business Asset Disposal Relief charges 18% on qualifying gains. That is up from 14% in the 2025/26 tax year and 10% before 6 April 2025. The relief still gives a reduced capital gains tax rate on a qualifying business sale, but the discount against the standard rate is smaller than it used to be.
What is the BADR lifetime limit?
The reduced rate applies to a lifetime total of £1,000,000 of qualifying gains. It is a running total across your lifetime, not a per-sale or per-year allowance, so a claim on an earlier disposal uses part or all of it. Qualifying gains above the £1m limit are taxed at the standard capital gains tax rate.
Is BADR the same as Entrepreneurs' Relief?
Yes. Business Asset Disposal Relief is the renamed Entrepreneurs' Relief - the same relief under a different name since 2020. Guidance, accountants or older articles that mention Entrepreneurs' Relief are describing what is now called BADR.
Who qualifies for Business Asset Disposal Relief?
Broadly, for a disposal of company shares you need to hold at least 5% of the ordinary shares and voting rights, to be an officer or employee of the company, and to have met those conditions throughout a two-year qualifying period up to the sale. It is aimed at founders and owner-operators rather than passive minority shareholders, so a passive stake in a startup you backed will not normally qualify. Confirm the detailed conditions at GOV.UK.
Is this article financial advice?
No. This is general information about how Business Asset Disposal Relief works, not financial or tax advice and not a recommendation about whether or how to sell anything. The rate, the lifetime limit and the qualifying tests change with Budgets and depend on your circumstances. Confirm the current rules at GOV.UK and take FCA-regulated advice before acting on a sale.