Business asset disposal relief for sole traders

Produced by a Tolley Owner-Managed Businesses expert

Owner-Managed Businesses

Guidance

This guidance note discusses the application of business asset disposal relief (BADR) for sole traders only. Business asset disposal relief (BADR) is a capital gains tax (CGT) relief that allows business owners with chargeable gains on qualifying business assets to pay CGT at a rate of 10%. The relief is available on up to £1m of capital gains for each individual over their lifetime.

At the Autumn Budget 2024, it was announced that the rate of BADR will increase to 14% for disposals made on or after 6 April 2025, and from 14% to 18% for disposals made on or after 6 April 2026.

There will be anti-forestalling rules which will apply where a contract is made from 30 October 2024 to 5 April 2026 and completed from 6 April 2025. In such cases disposals will be subject to the new rates of CGT unless:

•
the parties to the contract can demonstrate that they did not enter into the contract with a purpose of obtaining a tax advantage by reason of the timing

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