Entrepreneurs' Relief Is Now BADR: The 18% CGT Rate
If you're hunting for "Entrepreneurs' Relief", you're looking for something that was renamed years ago. On 6 April 2020 it became Business Asset Disposal Relief (BADR) - same relief, new label - and the lifetime limit was cut from £10 million to £1 million at the same time.1 Today it caps CGT at 18% on qualifying business gains up to that £1,000,000. Here's what changed, what didn't, and how the relief works now.
- Entrepreneurs' Relief was renamed Business Asset Disposal Relief on 6 April 2020 - the rules carried over, the name did not.1
- The lifetime limit was slashed from £10m to £1m in March 2020, and both count together - Entrepreneurs' Relief you claimed before still eats into your £1m.1
- The rate is now 18% from 6 April 2026 (10% until 5 Apr 2025, 14% in 2025/26) - the disposal date decides which applies.1
- You need 5% of shares and votes plus an officer/employee role for 2 years in a trading company - or a sole-trade/partnership business owned 2+ years.1
- Standard CGT above the limit is 18%/24%; claim BADR on Self Assessment.2
The rename: Entrepreneurs' Relief to BADR
Two things happened in spring 2020, and people still muddle them. First, the Budget of March 2020 cut the lifetime limit from £10 million to £1 million overnight. Second, from 6 April 2020 the relief was renamed Business Asset Disposal Relief.1 The qualifying conditions barely moved - if you knew how Entrepreneurs' Relief worked, you already know how BADR works. What changed is the ceiling and the label.
That £1m is a single running total across your life. Any Entrepreneurs' Relief you claimed before April 2020 still counts against it, so a founder who used £600,000 of relief years ago has only £400,000 of BADR headroom left.
How BADR works today
BADR fixes the CGT rate on qualifying gains at 18% for 2026/27 - the same rate whether you're a basic or higher-rate taxpayer, which is the whole point of it for higher earners who'd otherwise pay 24%.2
The rate has been rising: 10% from 2020 to 5 April 2025, 14% for 2025/26, then 18% from 6 April 2026. It's the disposal (completion) date that fixes your rate - 14% between 6 April 2025 and 5 April 2026, 18% on or after 6 April 2026.
Qualifying conditions for company shares
The usual route is shares in your personal trading company. All of the following must hold throughout the two years immediately before disposal:1
- You hold at least 5% of the ordinary share capital;
- Those shares carry at least 5% of the voting rights;
- You're entitled to at least 5% of distributable profits and 5% of assets on a winding up;
- You're an officer (director) or employee of the company; and
- The company is a trading company or holding company of a trading group.
The two-year period is strict. Set up and sell inside 18 months - no BADR. Become a director less than two years before sale - no BADR, even if you held the shares longer. The clock runs to the disposal date.
The trading company requirement
The company has to be substantially trading rather than investing. HMRC works to a broad 80% test: at least 80% of assets, income and activity should be trading. Cash-rich companies can fail it - years of retained profit held as surplus cash, or an investment property on the books, can push the investment element too high. If you're borderline before a sale, take advice on extracting surplus cash as a pre-sale dividend (paying income tax now) to protect trading status.
Dilution below 5%: protect your eligibility
A funding round that issues new shares can drop you from 8% to 4% and end your BADR eligibility instantly. HMRC allows an anti-dilution election: where a qualifying commercial share issue takes you under 5%, you can elect to be treated as disposing of and reacquiring the shares at market value at that point, crystallising a gain while BADR still applies. The election must be made within the Self Assessment deadline - and it's usually far better made before the dilution than after.
Worked example - a sub-£1m share sale
Sarah founded a marketing agency in 2020 and has owned 60% throughout. In 2026/27 she sells all her shares for £900,000; her subscription cost was £5,000. She has no other gains this year and has never used any BADR limit.
| Sale proceeds | £900,000 |
| Less acquisition cost | −£5,000 |
| Gain | £895,000 |
| Less annual exempt amount | −£3,000 |
| Taxable gain | £892,000 |
| CGT due (£892,000 × 18% BADR) | £160,560 |
At the standard 24% rate the bill would be £214,080, so BADR saves Sarah £53,520. She claims the relief on her 2026/27 Self Assessment return.2
Selling a business or personal company shares? The CGT Survival Pack - £4.99 helps you organise the key figures, check your BADR eligibility notes and keep records for Self Assessment.
Get the pack →Other qualifying assets
BADR also reaches:
- Sole trader or partnership disposals - selling all or part of a business run as a sole trade or partnership, where the assets were used in the business and owned for at least two years;
- Associated disposals - a personal asset (say, premises you own but the company uses) sold alongside a qualifying company disposal;
- Trustees' gains from trusts holding qualifying business assets, under specific rules.
How to claim
BADR is never automatic. You claim it on the Capital Gains pages (SA108) of your Self Assessment return for the year of the disposal.3 For a 2026/27 sale that's the return due by 31 January 2028, and the claim window runs to 31 January 2029. Miss it and the relief is lost - so log the figures and the two-year dates the moment the deal completes.
Calculate CGT on your business sale
The calculator shows CGT at standard rates. For BADR gains, apply 18% to the qualifying gain and compare with the standard-rate estimate.
Open the CGT calculatorFrequently asked questions
Is Entrepreneurs' Relief still available?
Yes, but under a new name. Entrepreneurs' Relief was renamed Business Asset Disposal Relief on 6 April 2020. The relief still exists and works the same way; only the name changed. A separate change in March 2020 cut the lifetime limit from £10 million to £1 million.
What is the BADR rate for 2026/27?
18% for disposals on or after 6 April 2026. The rate was 14% from 6 April 2025 to 5 April 2026, and 10% before that. The disposal (completion) date determines which rate applies.
What is the BADR lifetime limit?
£1 million per individual, cumulative across all qualifying disposals throughout your lifetime. It was cut from £10 million to £1 million in March 2020, and Entrepreneurs' Relief claimed before then counts towards it. Once used up there's no reset; further qualifying gains are taxed at standard rates.
Is BADR claimed automatically?
No. You must claim BADR on your Self Assessment return (SA108 Capital Gains pages) for the year of disposal. If you don't claim within the amendment window, the relief is permanently lost.
What happens if my shareholding drops below 5% before sale?
You lose BADR eligibility. If the dilution came from a qualifying commercial share issue, you can elect to crystallise the gain at market value just before the dilution and claim BADR on that amount. Make the election before you raise the money, not after.
This page is for general information only. BADR conditions are complex - take qualified tax advice before a business disposal to confirm eligibility and structure the transaction correctly.
Sources & references
The rates, allowances and rules in this guide are drawn from the official HMRC and GOV.UK sources below, checked for the 2026/27 tax year. Each link opens the relevant government page in a new tab.
- Business Asset Disposal Relief www.gov.uk/business-asset-disposal-relief
- Capital Gains Tax: rates www.gov.uk/capital-gains-tax/rates
- Capital Gains Tax — GOV.UK www.gov.uk/capital-gains-tax