Business Asset Disposal Relief (BADR)

Business Asset Disposal Relief (BADR) – previously known as Entrepreneurs’ Relief.

Certain QUALIFYING BUSINESS DISPOSALS can receive a Capital Gains Tax rate of 10%, known as Business Asset Disposal Relief (BADR), as long as the assets have been owned for a QUALIFYING OWNERSHIP PERIOD.


  • The disposal of all or part of an individual’s UN-INCORPORATED BUSINESS or PARTNERSHIP.
  • The disposal of SHARES in an incorporated business, as long as the individual owns more than 5% of the company (ie. an individual’s PERSONAL TRADING COMPANY) AND the individual is a part-time or full-time employee of the company over the 2 year QUALIFYING OWNERSHIP PERIOD.
  • The disposal of the individual assets of an un-incorporated business or partnership following the CESSATION of trade. Under these circumstances then as long as the individual assets are sold within 3 years of the cessation of trade and the business was operated for over 2 years, BADR will apply.

This relief does NOT apply to the sale of INDIVIDUAL BUSINESS ASSETS used in the ONGOING trade of an individual’s un-incorporated or partnership business, that are sold in isolation. Under these circumstances then ROLLOVER RELIEF may apply.

Every individual is entitled to a lifetime amount of Business Asset Disposal Relief (BADR) of £1 million.


There is a 2 year minimum period that an un-incorporated business or partnership must have been owned for.

In the case of shares, an individual must have owned a minimum of 5% of the company AND have been a full-time / part-time employee for more than 2 years.

Note: For shares acquired through ENTERPRISE MANAGEMENT INCENTIVE schemes, the ownership period beings from the date the options are GRANTED, not the date of exercise AND there is no requirement to own more than 5% of the company to qualify for BUSINESS ASSET DISPOSAL RELIEF (BADR).

Other factors

For the disposal of shares, if a company owns any non-business assets, for example, assets held for investment, then there is NO RESTRICTION of the relief. A company is deemed to be either a trading company or not.

For UN-INCORPORATED / PARTNERSHIP businesses there is no relief available on the disposal of assets that have been held for INVESTMENT PURPOSES.

For capital gains relating to GOODWILL that has been transferred to a CLOSE COMPANY, then BUSINESS ASSET DISPOSAL RELIEF (BADR) is NOT available.

If shares have been acquired through the process of INCORPORATION, the period of ownership of the un-incorporated business counts towards the 2 year QUALIFYING OWNERSHIP PERIOD.

Associated Disposals

If an individual owns assets that have been used by their Personal Trading Company or Partnership, then if these assets are sold at the same time as an individual’s withdrawal from a partnership or company business AND the individual also sells part or all of their partnership interest or company shares, then this is known as an ASSOCIATED DISPOSAL. BUSINESS ASSET DISPOSAL RELIEF will be available.

If RENT has been charged to the businesses for the use of the asset, then BADR relief is restricted. For example, if the individual charged rent at 80% of the market rate, then BADR relief would only be available on 20% of the gain.