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 an exit, the change in Business Asset Disposal Relief (BADR) rates in April 2026 has added a concrete financial dimension to the timing question.

What BADR Is

Business Asset Disposal Relief is a Capital Gains Tax relief 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 6 April 2025. A further increase to 18 per cent was announced for 6 April 2026. At the time of writing, that second increase is legislated and expected to proceed.

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. On a larger gain, the impact scales proportionally. A qualifying gain of £1.5 million would generate a tax difference of £60,000 between the two rates.

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 has 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 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 are already considering their options and who would qualify for BADR, the April 2026 rate change creates a practical deadline. A sale needs to complete before that date to benefit from the 14 per cent rate. Given that a fire safety business sale typically takes between four and nine 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.

If you have been thinking about this and have not yet started the conversation, the tax calendar is one more reason not to leave it any longer.