CGT—business asset disposal relief (formerly entrepreneurs' relief)
Produced in partnership with Satwaki Chanda
CGT—business asset disposal relief (formerly entrepreneurs' relief)

The following Tax practice note Produced in partnership with Satwaki Chanda provides comprehensive and up to date legal information covering:

  • CGT—business asset disposal relief (formerly entrepreneurs' relief)
  • Qualifying business disposals
  • Material disposals
  • Disposals of trust business assets
  • Associated disposals
  • Material disposals—shares or securities
  • Condition A
  • Condition B
  • Conditions C and D
  • Personal company test
  • More...

Business asset disposal relief (BADR), which was called entrepreneurs' relief for tax years prior to 2020–21, is a capital gains tax (CGT) relief that was 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%.

The relief 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. For disposals taking place on or after 11 March 2020, the maximum amount of gains that may benefit from BADR is £1m (reduced from the previous limit of £10m). All past claims to BADR (or entrepreneurs’ relief), since the rules were introduced in 2008, count towards this limit. For more details, see below (Amount of relief).

This Practice Note looks at the types of disposal that will attract BADR, and describes how the relief is calculated. It also describes how the relief can apply to share-for-share exchanges.

Qualifying business disposals

BADR applies to 'qualifying business disposals', of which there are three main categories. These are listed below, then

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