The short version: BADR (Business Asset Disposal Relief) is a tax break that cuts your Capital Gains Tax rate from up to 20% down to 10% when you sell your business or shares. It used to be called Entrepreneurs’ Relief.
How much can you save?
You’ve got a lifetime limit of £1 million in qualifying gains. At a 10% saving on each pound, that’s potentially up to £100,000 in tax saved over your lifetime.
Who qualifies?
You need to be either a sole trader or business partner who’s owned the business for at least two years, or an employee or director selling shares in a trading company you work for. Companies themselves can’t claim it. Neither can pure investors.
What counts as disposal?
Selling is the obvious one. But it also includes giving your business away or swapping it for something else. Basically, any time you stop owning it.
How do you claim?
Through your Self Assessment tax return. The deadline is 31st January, one year after the tax year when you made the disposal.
Thinking about selling up? Talk to us first so you don’t miss out on any reliefs.
