BADR Tax

BADR stands for Business Asset Disposal Relief tax. It was previously known as Entrepreneurs’ Relief and is a form of Capital Gains Tax relief. BADR encourages business investment and growth by offering valuable tax relief when you sell or dispose of a business asset. BADR reduces the Capital Gains Tax rate from 20% to 10% and has a lifetime limit of £1 million. You could potentially save up to £100,000 in tax per year.

How do I know if I’m eligible for BADR?

You can be eligible if you are:

• For business disposals, the individual must have owned the business for at least two years before the date of disposal.
• For share disposals, the shares must be in a ‘personal company’ where the individual has at least 5% of both the shares and voting rights, and the individual must be an employee or officer of the company. The company must also be trading or the holding company of a trading group.

Companies and investors are not eligible for BADR. To qualify for the relief when selling your business, you must be a sole trader or business partner and have owned the business for a minimum of 2 years. If you’re selling shares, you must be an employee or office holder within a company that trades, rather than invests.

Business Asset Disposal Relief has a deadline of 31st January of the year after the tax year ends. If you have any queries about BADR, get in touch with our experts today for comprehensive advice about the savings and relief you may be entitled to.