Formerly known as “Entrepreneurs’ Relief,” the term “BADR” now stands for “Business Asset Disposal Relief.” It’s a reduced rate of capital gains tax (CGT) to inspire entrepreneurs to put more money into their companies. When it comes to paying taxpayers, this relief is a great help to those who are hit with higher or additional rates. Even though its benefits have been eroded and its abolition has been threatened in recent years, BADR has endured to this day and continues to deliver tax savings to business owners despite widespread scepticism about its ability to achieve its stated goal.

Gains eligible for BADR are taxed at a rate of 10% instead of the current regular rate of CGT, which is 20%. When selling business property, BADR might be used. There is a lifetime limit on gains eligible for the relief of £1,000,000. Therefore the most you may save in tax under BADR is £100,000.

Those who qualify for this relief include individuals who sell their businesses or partnership interests and directors and employees who sell shares in the company or group of firms for which they work. In addition, under some circumstances, trustees may also be eligible for BADR; however, this issue is not further upon in this fact sheet.

Companies are not eligible for the Business Asset Disposal Relief (BADR), and as the relief is limited to business assets, taxpayers cannot deduct the sale of investment assets using the BADR.