On 6 April 2026, Business Asset Disposal Relief changes. The Capital Gains Tax rate for qualifying business disposals rises from 14 per cent to 18 per cent. For an FM business owner selling a business with significant gains, the difference between completing before and after this date is a meaningful sum of money. This article sets out what BADR is, how it applies to FM business sales, and what the rate change means in practical terms.
What Business Asset Disposal Relief Is
Business Asset Disposal Relief, formerly known as Entrepreneurs' Relief, provides a reduced rate of Capital Gains Tax on qualifying disposals of business assets. The key qualifying conditions for a business sale are that you have owned at least five per cent of the company's ordinary share capital for at least two years, and that you have been an employee or officer of the company for at least two years.
If you qualify, BADR applies to gains up to a lifetime limit of £1 million. Above that limit, standard CGT rates apply, which for higher and additional rate taxpayers in 2026 is 24 per cent.
The BADR rate itself has been adjusted several times in recent years. It stood at 10 per cent until 2024, rose to 14 per cent in the 2024 Autumn Budget, and rises again to 18 per cent from 6 April 2026. The direction of travel has been consistently upward, and there is no guarantee the rate will not increase further in future.
What the Rate Change Means in Practice
The practical impact depends on the size of your gain. Here are some straightforward examples.
On a gain of £500,000: at 14 per cent the tax is £70,000; at 18 per cent it is £90,000. The difference is £20,000.
On a gain of £750,000: at 14 per cent the tax is £105,000; at 18 per cent it is £135,000. The difference is £30,000.
On a gain of £1 million (the lifetime limit): at 14 per cent the tax is £140,000; at 18 per cent it is £180,000. The difference is £40,000.
These are not trivial numbers. They are also not the whole picture, because the total tax position on a business sale depends on the structure of the deal, how the proceeds are distributed, and your individual tax circumstances. Professional advice from a tax adviser who specialises in business disposals is essential before making any decisions based on the timing of a sale.
The Realistic Timeline
The rate change on 6 April 2026 is now very close. An FM business sale typically takes four to six months from the point of instructing advisers to legal completion. If you have not yet started the process, completing before the deadline is almost certainly not achievable.
What the deadline should do is serve as a catalyst for FM owners who have been considering their options to move from consideration to action. The question to ask yourself is not "can I complete before April?" but "am I going to sell this business in the next two to three years, and if so, what am I waiting for?"
Starting the preparation process now, getting a proper valuation, understanding your likely tax position, and assessing the state of your business in readiness for sale, costs nothing and creates no obligation. It gives you information and options that you do not currently have.
If You Are Already in a Sale Process
If you are already working with a broker or adviser and are in active discussions with a buyer, speak to them immediately about whether completion before 6 April is realistic. If heads of terms are agreed and due diligence is well advanced, it may be achievable. If the process has barely started, it almost certainly is not.
Do not let the deadline drive you into accepting a materially lower price or compromising the deal structure. The tax saving needs to be weighed against the overall outcome. A sale price that is £50,000 lower to achieve a deadline will typically cost more than the tax saving.
If you are considering your options, start with a free confidential valuation at facilitiesmanagementbusinessforsale.co.uk/valuation.html. We will give you an honest assessment of your realistic timeline and what the current tax environment means for your specific situation.
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