Business Asset Disposal Relief (BADR) can reduce the Capital Gains Tax payable when an individual sells or disposes of qualifying business assets.
It was previously known as Entrepreneurs’ Relief, before being renamed Business Asset Disposal Relief in April 2020.
For qualifying disposals made from 6 April 2026, the BADR rate is 18%.
BADR can also be relevant when shareholders close a solvent limited company through a Members Voluntary Liquidation (MVL) and receive capital distributions from the liquidator.
However, the relief is not automatically available simply because a company enters an MVL. The relevant eligibility conditions must also be satisfied.
💡 Quick Answer
Business Asset Disposal Relief (BADR), formerly known as Entrepreneurs’ Relief, can reduce Capital Gains Tax on qualifying business disposals.
For qualifying disposals made from 6 April 2026, the BADR rate is 18%.
The relief is subject to eligibility conditions and applies to qualifying gains up to a £1 million lifetime limit per individual.
BADR may be relevant to shareholders receiving capital distributions through a Members Voluntary Liquidation (MVL), but it is not automatically available simply because a company enters an MVL.
What is Business Asset Disposal Relief (BADR)?
Business Asset Disposal Relief reduces the Capital Gains Tax rate applying to qualifying business disposals.
The current rates are:
| Date of qualifying disposal | BADR rate |
|---|---|
| On or before 5 April 2025 | 10% |
| 6 April 2025 to 5 April 2026 | 14% |
| From 6 April 2026 | 18% |
The historical rates matter because many older articles still refer to BADR at 10% or 14%.
For qualifying disposals taking place now, the relevant BADR rate is 18%.
The relief is also subject to a lifetime limit on the amount of qualifying gains.
Is Entrepreneurs’ Relief the Same as BADR?
Yes.
Entrepreneurs’ Relief was renamed Business Asset Disposal Relief on 6 April 2020.
The old name is still commonly used by business owners and directors, particularly where they have previously discussed Entrepreneurs’ Relief with an accountant or adviser.
If you are looking for Entrepreneurs’ Relief today, the current relief is Business Asset Disposal Relief.
The name changed, but the underlying relief continues to provide a reduced Capital Gains Tax rate where the qualifying conditions are met.
Who Qualifies for Business Asset Disposal Relief?
The rules depend on the type of business asset being disposed of.
For shareholders disposing of shares in a limited company, BADR will generally require the relevant conditions to have been satisfied for at least two years before the disposal.
For most non-EMI share disposals, this normally includes:
- being an employee or office holder of the company, such as a director;
- the company being a trading company or the holding company of a trading group;
- owning at least 5% of the company’s shares;
- holding at least 5% of the voting rights; and
- being entitled to at least 5% of either the company’s distributable profits and assets on a winding-up, or the proceeds if the company is sold.
Different rules can apply to Enterprise Management Incentive shares and more complex ownership structures.
Eligibility should therefore be checked carefully where there are different share classes, changes in ownership or unusual shareholder arrangements.
What is the £1 Million BADR Lifetime Limit?
Business Asset Disposal Relief is subject to a £1 million lifetime limit per individual.
This is not an annual allowance.
It means that qualifying gains from previous disposals can reduce the amount of BADR still available.
For example, if someone has previously used BADR or Entrepreneurs’ Relief on £600,000 of qualifying gains, they would generally have £400,000 of their £1 million lifetime limit remaining.
Previous claims under the old Entrepreneurs’ Relief name count towards the same lifetime limit.
How Does BADR Apply to a Members Voluntary Liquidation?
BADR can be particularly relevant when shareholders close a solvent company through a Members Voluntary Liquidation.
Distributions made by a liquidator during a formal winding-up are generally treated as capital distributions.
Where the shareholder also meets the BADR eligibility conditions, qualifying gains may be taxed at the BADR rate.
For qualifying disposals from 6 April 2026, that rate is 18%.
However, an MVL does not automatically provide BADR.
The MVL determines how the company is formally wound up. BADR is a separate tax relief and each shareholder’s eligibility must be considered independently.
Different shareholders in the same company can therefore have different tax outcomes.
For a wider explanation of solvent liquidation, read our guide to Members Voluntary Liquidation.
You can also read our guide to Members Voluntary Liquidation costs.
Do You Need More Than £25,000 to Claim BADR?
No.
The £25,000 figure is not a BADR eligibility threshold, nor is it a minimum amount required before a company can use an MVL.
The £25,000 threshold relates to separate tax rules governing certain distributions made before a company is voluntarily struck off.
Where the relevant conditions are satisfied, pre-dissolution distributions can receive capital treatment where the total amount distributed does not exceed £25,000.
That is one reason shareholders with significant retained assets often compare voluntary strike off with an MVL before deciding how to close a company.
However:
- having more than £25,000 does not automatically mean an MVL is required;
- having less than £25,000 does not prevent a company using an MVL; and
- the £25,000 threshold does not determine whether BADR is available.
For more detail, see our guide to Members Voluntary Liquidation vs Strike Off.
What If the Company Has Already Stopped Trading?
A company ceasing to trade does not necessarily mean BADR immediately becomes unavailable.
HMRC allows relief to remain potentially available where the relevant qualifying conditions were met up to the point the company ceased trading and the disposal takes place within the applicable period.
For shareholders in a company that has stopped being a trading company, BADR can potentially remain available where the shares or qualifying capital distribution are disposed of within three years of cessation.
This can be particularly relevant where a company stops trading before entering an MVL.
The other qualifying conditions still need to be satisfied.
What Tax Applies If BADR Is Not Available?
BADR should not be considered in isolation.
Where BADR does not apply, gains may instead be taxed at the normal Capital Gains Tax rates applying to the individual.
The actual amount payable will depend on factors including:
- the size of the gain;
- the individual’s taxable income;
- allowable losses;
- available exemptions; and
- other gains arising during the tax year.
This means an MVL should never be presented as automatically producing a particular tax rate.
Individual shareholders should obtain appropriate tax advice where necessary.
How Do You Claim Business Asset Disposal Relief?
Business Asset Disposal Relief must be claimed.
For many individuals, the claim can be made through the Capital Gains Tax section of their Self Assessment tax return.
Records should be retained to demonstrate that the relevant qualifying conditions were satisfied.
These may include evidence of:
- share ownership;
- voting rights;
- employment or directorship;
- the company’s trading status;
- the period during which the shares were held; and
- previous BADR or Entrepreneurs’ Relief claims.
An accountant or tax adviser can help establish whether the conditions are met and assist with the claim.
What Are the Two-Year Anti-Phoenix Rules?
Additional tax rules can apply where someone closes a company, receives a capital distribution and then becomes involved with the same or a similar trade or activity.
These are commonly referred to as the anti-phoenix rules.
The rules are intended to prevent company owners repeatedly winding up companies primarily to obtain a tax advantage.
They can potentially apply where several conditions are met, including situations where the individual becomes involved in the same or a similar activity within two years of receiving the distribution.
However, starting another business within two years does not automatically mean the distribution will be treated as income.
The rules contain several conditions, including consideration of whether obtaining an Income Tax advantage was one of the main purposes of the arrangements.
Anyone intending to continue the same or a similar business after an MVL should consider taking specialist tax advice.
Considering a Members Voluntary Liquidation?
If you’re closing a solvent limited company, Business Helpline can explain how a Members Voluntary Liquidation works and whether it may be an appropriate way to bring your company to a close.
We provide free, confidential and unbiased initial advice to limited company directors.
We can explain:
- how the MVL process works;
- whether the company appears suitable for solvent liquidation;
- likely professional costs;
- how an MVL compares with voluntary strike off; and
- the practical steps involved in closing the company.
Business Helpline does not provide personal tax advice, so individual BADR eligibility and tax calculations should be confirmed with an appropriately qualified tax adviser.
Call our free 24-hour helpline on 0800 088 2142 or request a confidential call back.
Frequently Asked Questions About Business Asset Disposal Relief
What is the BADR rate in 2026?
For qualifying disposals made from 6 April 2026, the Business Asset Disposal Relief rate is 18%.
The previous rate was 14% for disposals between 6 April 2025 and 5 April 2026.
Is Entrepreneurs’ Relief still available?
The relief still exists, but it has been called Business Asset Disposal Relief since April 2020.
Entrepreneurs’ Relief is the former name.
What is the BADR lifetime limit?
The current lifetime limit is £1 million of qualifying gains per individual.
Previous claims for BADR or Entrepreneurs’ Relief count towards this limit.
Do I need to own 5% of a company?
For most non-EMI share disposals, the shareholder generally needs at least 5% of the shares and voting rights, together with the required economic entitlement.
Other qualifying conditions also apply.
Does everyone using an MVL qualify for BADR?
No.
Entering an MVL does not automatically qualify a shareholder for BADR.
Each shareholder must independently satisfy the relevant tax conditions.
Does a company need £25,000 before BADR applies?
No.
The £25,000 threshold relates to the treatment of certain distributions before voluntary strike off. It is not a BADR eligibility requirement.
Can I start another business after an MVL?
Yes, but anti-avoidance rules may need to be considered where the new activity is the same as or similar to the business being wound up.
Professional tax advice may be appropriate depending on the circumstances.
