Business asset disposal relief (previously entrepreneurs' relief) and enterprise management incentives (EMI) schemes
Business asset disposal relief (previously entrepreneurs' relief) and enterprise management incentives (EMI) schemes

The following Share Incentives practice note provides comprehensive and up to date legal information covering:

  • Business asset disposal relief (previously entrepreneurs' relief) and enterprise management incentives (EMI) schemes
  • Business asset disposal relief
  • Trading company (condition C) versus non-trading company (condition D)
  • Date of disposal of the shares acquired pursuant to EMI options for BADR purposes
  • Who can claim BADR in respect of shares exercised pursuant to EMI options?
  • What are the BADR requirements relating to the EMI option?
  • What are the BADR requirements relating to the EMI company?
  • What are the BADR requirements relating to rolled-over EMI shares?
  • What if I am disposing of EMI and non-EMI shares?
  • Mistakes and misconceptions of the BADR treatment of shares acquired from EMI options
  • More...

Business asset disposal relief

Business asset disposal relief (BADR), is a capital gains tax (CGT) relief designed to encourage individuals to set up and expand their own businesses. Provided that the conditions are satisfied, the effect of the relief is to reduce the rate of CGT on the sale of certain business assets to 10%. Although it was previously known as entrepreneurs’ relief, it is renamed as business asset disposal relief with effect from 6 April 2020.

BADR applies to individuals, whether operating as sole traders or in partnership, or through a corporate vehicle. It also applies where the business assets are held by the trustees of a settlement. Companies are not eligible for BADR.

There is a lifetime limit on the amount of BADR that can be claimed by any one individual. The maximum amount of gains that can benefit from BADR reduced from £10m to £1m in relation to qualifying disposals made on or after 11 March 2020, under legislation introduced under the Finance Act 2020. For further information on the BADR lifetime limit, see Practice Note: CGT—business asset disposal relief (formerly entrepreneurs' relief).

This Practice Note looks specifically at condition C and condition D referred to in section 169I of the Taxation of Chargeable Gains Act 1992 (TCGA 1992), which are alternative tests to be met in order for a disposal of shares acquired though

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