BADR Tax Changes: Why April 2026 Matters

Tax planning is not the only reason to sell a business, and it should not be the deciding factor on its own. But it is a genuine consideration, and for fire safety business owners who were already thinking about selling, the April 2026 rise in the tax rate under Business Asset Disposal Relief (BADR), the relief for owners selling a business they work in, has added a concrete financial dimension to the timing question.

Update, November 2026. The October 2026 Budget announced that the Business Asset Disposal Relief lifetime limit will fall from £1 million to £500,000 for qualifying disposals from the start of the 2027 to 2028 tax year in April 2027. Relief already claimed counts towards the limit, and the 18% rate does not change. For tax, the date of an unconditional contract normally counts as the date of disposal rather than completion, and specific rules will apply to contracts signed before the change that complete after it. Where this page quotes a different limit, rate or date, this note takes priority. Take advice on your own position. What the change means for owners.

What BADR Is

Business Asset Disposal Relief is a relief on Capital Gains Tax, the tax on the profit you make when you sell, available to qualifying business owners on the disposal of a business or its assets. When you sell a qualifying trading business, BADR allows you to apply a reduced CGT rate to the gain, subject to a lifetime allowance of £1 million.

For many fire safety business owners, the gain on the sale of a business they have built over many years will be the largest single financial event of their working life. The rate applied to that gain under BADR therefore matters considerably.

The Rate Change and Its Impact

The BADR rate was 10 per cent until the October 2024 Budget, which raised it to 14 per cent with effect from Apr 2025. A further increase, to 18 per cent, took effect in Apr 2026.

To illustrate the difference: on a qualifying gain of £1 million, the tax at 14 per cent is £140,000. At 18 per cent, it is £180,000. That is a difference of £40,000 on a £1 million gain. Because the relief stops at the £1 million lifetime limit, the difference is never more than £40,000, however large the gain.

These are not trivial sums. For an owner who was already considering a sale within the next two to three years, the April 2026 deadline created a tangible financial incentive to move faster than they might otherwise have done.

What This Does Not Mean

It would be a mistake to rush a sale purely to capture a tax rate before a deadline if the business is not ready, or if market conditions are not favourable, or if the right buyer has not been found. A poorly executed sale at a lower multiple of profit will often cost more than the tax saving it was meant to generate. Tax efficiency and sale quality are not in opposition, but they should be properly balanced.

It is also worth noting that BADR has conditions. The seller must have owned at least 5 per cent of the company shares (or the assets being sold), have been an employee or director, and the company must be a trading company or holding company of a trading group. Your accountant can advise on whether your specific circumstances qualify.

The Practical Implication

For fire safety business owners who were considering their options and who would qualify for BADR, the April 2026 rate change created a practical deadline: the 14 per cent rate applied only to disposals up to Apr 2026. Given that a fire safety business sale takes months from first conversation to completion, the window for a new instruction to complete before April 2026 was already narrow at the start of 2026. That date has now passed, and the 18 per cent rate applies.

If you have been thinking about this and have not yet started the conversation, the rate step has now passed, so the case for starting is about preparing properly rather than the tax calendar.

Tax and legal advice on a sale comes from your own advisers, and it helps to know who you will need, and when to bring them in.