From 6 April 2026, a key change hits Capital Gains Tax (CGT) for many business owners. The rate under Business Asset Disposal Relief (BADR) rises from 14% to 18%. This relief applies to qualifying gains on business disposals, such as selling shares in your trading company or assets from a sole trade or partnership.
Main CGT rates already increased in late 2024 to 18% for basic rate taxpayers and 24% for higher rate on most assets (other than residential property). The BADR increase aligns it closer to standard rates, reducing the tax saving on qualifying business sales.
The Annual Exempt Amount stays at £3,000 for 2025/26 and likely beyond. Lifetime limit for BADR remains £1 million of gains.
For business owners planning to sell assets or exit, these hikes add urgency. Timing disposals and claiming reliefs can make a real difference to your tax bill.
Know the Rates and What Qualifies
Standard CGT rates from 30 October 2024 onward:
- 18% if gains plus income fall in the basic rate band
- 24% on amounts above
BADR gives a lower rate on qualifying gains:
- 14% for disposals up to 5 April 2026
- 18% from 6 April 2026
To qualify for BADR, you typically need to have owned the business or shares for at least two years, and the business must be trading (not investment-focused). This covers sole traders selling assets, partners exiting, or directors selling qualifying shares in a personal trading company.
Investors’ Relief follows a similar path, rising to 18% for qualifying investments.
If your disposal falls just before or after the change, the rate difference matters. On a £100,000 qualifying gain, the extra 4% from April 2026 adds £4,000 to the bill.
Time Your Sales Strategically
If a sale is on the horizon, consider accelerating it before 6 April 2026 to lock in the 14% BADR rate. This works well for planned exits or partial disposals.
Be realistic about timing. Rushed sales can mean lower proceeds or complications. Weigh the tax saving against deal value.
For disposals after the date, the 18% rate still beats the standard 24% for higher rate taxpayers, so BADR remains worthwhile if you qualify.
Spread disposals over tax years to use multiple annual exemptions or stay in lower bands.
Maximise Exemptions and Reliefs
Use your £3,000 annual exemption each year. Unused amounts do not carry forward, so make full use where possible.
Offset losses against gains. Report any capital losses to reduce taxable amounts.
For business assets, check rollover relief if reinvesting proceeds into new qualifying assets. This defers the gain rather than exempting it.
Pension contributions or other reliefs can free up basic rate band space, keeping more gains at lower rates.
For company owners, incorporation relief might defer gains if transferring a sole trade to a limited company, though claims now go through Self Assessment.
Plan Ahead for Business Assets
Review your business structure. Ensure shares or assets meet trading tests for BADR.
If selling shares, confirm two-year ownership and personal company status.
Many find professional valuations help maximise reliefs.
Good record-keeping supports accurate reporting. Quick checks on company details aid planning.
The Companies House on the Go app provides fast access to your company’s filings, accounts, confirmation statements, and updates from your phone. It helps verify status or prepare for disposals without full portal access.
Download for iOS: https://apps.apple.com/us/app/uk-companies-house-on-the-go/id6743302358
Or Android: https://play.google.com/store/apps/details?id=com.companiesonthe.go
For more on efficient company admin, visit Companies on the Go.
Get Advice and Act Early
CGT rules involve nuances, especially around qualifying conditions or multiple reliefs. An accountant or tax adviser can model scenarios, check eligibility, and suggest optimal timing.
With the April 2026 change approaching, review your position now. Small adjustments can save thousands.
CGT hikes aim to raise revenue, but smart planning lets business owners keep more from asset sales. Focus on timing, reliefs, and professional input to navigate 2026 effectively.
Prepare thoughtfully, and you protect your gains as much as possible.
