Planning your exit? Watch out for the BADR changes

If you are thinking about selling your business, timing could be everything.

Business Asset Disposal Relief (BADR), formerly known as Entrepreneurs’ Relief, helps business owners reduce their Capital Gains Tax (CGT) liability when selling qualifying assets.

However, with adjustments to BADR coming in April 2025, it is important to make plans for an exit strategy sooner rather than later.

Current BADR rules and the upcoming change

BADR currently allows eligible sellers to pay a reduced CGT rate of 10 per cent on gains up to £1 million over their lifetime.

This is a substantial saving compared to the standard CGT rate of up to 24 per cent.

However, from April 2025, this preferential rate rises to 14 per cent, and from April 2026, it increases again to 18 per cent.

So, if you are a business owners considering a sale, should you bring forward your plans to lock in the lower tax rate?

Consider your options before a rushed sale

While selling before the rate rise may seem like a straightforward decision, there are other factors to consider:

• Is the market favourable?
• Is your business in the best possible position to attract buyers?
• Does the timing coincide with your personal financial goals?

Anti-forestalling rules also mean that certain transactions, such as share reorganisations, loan notes or sales to connected parties, could be caught under the new rates.

If you have structured a sale or disposal in recent years, you may need to review your position to avoid unexpected tax liabilities.

With the deadline fast approaching, you should act immediately.

Speak with our experts today for exit strategies and advice on the reliefs available to you.