Business Asset Disposal Relief (BADR) is a tax relief in the UK that applies to the sale or disposal of qualifying business assets by individuals or partnerships. It was previously known as Entrepreneurs' Relief until April 2020.
Under BADR, individuals can benefit from a reduced rate of Capital Gains Tax (CGT) of 10% on qualifying business asset disposals, subject to certain conditions. The relief applies to the disposal of shares or securities in a trading company or the disposal of business assets by an individual who is a sole trader or partner in a partnership. The assets must have been owned for at least two years before the disposal.
The relief is subject to a lifetime limit of £1 million for disposals made on or after 11 March 2020. Disposals made before this date are subject to a lifetime limit of £10 million.
To qualify for BADR, certain conditions must be met, including:
The individual must hold at least 5% of the shares and voting rights in the company or be a partner in the business.
The company or partnership must be a trading company or trading group.
The individual must have been an officer or employee of the company or group for at least two years.
The assets being disposed of must be used in the business.
There are also other conditions that must be met, and it is important to seek professional advice to ensure that you qualify for the relief.
Overall, BADR can be a valuable tax relief for business owners who are disposing of qualifying business assets, as it can help to reduce the amount of CGT payable and potentially increase the value of the disposal.
