Future increases in CGT on sale of a business

Posted on 6th January 2025 by Streets - Capital Gains Tax

Planning to sell your business or shares? Capital Gains Tax rates for Business Asset Disposal Relief (BADR) are set to rise from 10% to 14% on 6 April 2025, and to 18% from 6 April 2026. Selling before these dates could result in significant tax savings.

Business Asset Disposal Relief (BADR) applies to the sale of a business, shares in a trading company, or an individual’s interest in a trading partnership. When this relief is available, a reduced Capital Gains Tax (CGT) rate of 10% is currently applied instead of the standard rate, potentially resulting in significant tax savings for those exiting their business.

It is important to note the future increases in the CGT rate for BADR that were announced as part of the Autumn Budget measures. The CGT rate for BADR will increase to 14% for disposals made on or after 6 April 2025. A further increase to 18% will apply for disposals made on or after 6 April 2026.

For business owners contemplating an exit strategy, the coming months might be an opportune time to consider selling before the upcoming changes take effect on 6 April 2025.

Currently, you can claim a total of £1 million in BADR over your lifetime, allowing you to qualify for the relief multiple times. The lifetime limit may be higher if you sold assets before 11 March 2020. No changes were made to this lifetime limit in the recent Budget.

The lifetime limit for Investors’ Relief was reduced in the Autumn Budget to £1 million (from £10 million) for qualifying disposals made on or after 30 October 2024. The CGT rates for Investors’ Relief mirror those for BADR.

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