Business Asset Disposal Relief (BADR) – changes ahead
It was much speculated before the Autumn Statement that there would be changes to Business Asset Disposal Relief (BADR), and they came.
Whilst the threshold of £1m worth of gains will still apply the rate of taxation will be changing.
The current rate of 10% on the first £1m of gains will increase from April 2025 to 14% and then again from April 2026 to 18%. This will mean that this aligns with the new main rate of capital gains tax which became effective from 31st October 2024.
Business Asset Disposal Relief was previously known as Entrepreneur’s relief. Whilst the taxation rate has remained at the 10% rate we have previously seen a reduction to this relief with the lifetime limit heavily reduced from it’s previous limit of £10m, down to the current £1m that is in place.
There are some restrictions as to who qualifies for BADR but in principle the relief covers:
- Someone selling all or part of a business
- Someone selling shares or securities within a business they are involved in – this can include EMI shares
- Someone selling assets they lent to the a business
- Someone selling certain assets held in trust
Often we speak with business owners that have the aim to sell in the future with the business making up a significant value of what they may see as their pension come the time they want to exit and retire. These tax increases will therefore eat in to those potential proceeds.
It is therefore more essential then ever that if exit from your business is part of your plans that you work on your plan for your exit to ensure you maximise your potential value. If you aren’t sure where to start with this then we would be delighted to assist you.
01249 816 810
info@riverviewportfolio.co.uk
Riverview Portfolio | Property Tax Advice
