Business Asset Disposal Relief (BADR) could be sharply restricted in the Budget that Chancellor John Healey will present on 28 October. London Business News, citing The Telegraph, reports that the Treasury is considering such a cut. The government has not officially confirmed it.
BADR reduces Capital Gains Tax on the sale of a business or shares in a company. Since 6 April 2026 the relieved rate has been 18%. As recently as March 2025 it was 10%, and from April 2025 – 14%. The lifetime limit on gains eligible for relief is £1 million.
According to HMRC estimates, the relief cost the Exchequer £800 million in the last tax year. The Treasury is said to be considering using the savings for lower CGT rates or incentives for founders who reinvest in British companies. The Federation of Small Businesses (FSB) warns against scrapping the relief without careful thought. Data from Rathbones show that almost 5,800 businesses were sold in 2025 – the most in eight years.
What it means for you
This mainly concerns owners of limited companies (Ltd), sole traders and partners who plan to sell their business, retire or hand the firm over. The relief applies, among other conditions, when for at least 2 years you hold at least 5% of the shares and voting rights and are a director or employee of the company. On a £1 million gain, the difference between the 18% rate and the 24% higher rate is £60,000 in tax.
This change does not affect ordinary employees. Nor does it change tax on salaries or dividends.
Our assessment
For now these are press reports, not a decision. But the direction is consistent: the relief has been gradually reduced for two years. We think complete abolition is less likely than further narrowing, e.g. lowering the limit or tightening the conditions. Important: CGT changes can take effect on Budget day itself, so a rushed sale before 28 October is rarely a realistic option. It is, however, worth having a plan ready for different scenarios.
What to do
- Check the conditions of the relief on GOV.UK – Business Asset Disposal Relief.
- If you are in talks about selling a business, discuss with your accountant how a rate change would affect the price and timing of the deal.
- Follow the Budget speech on 28 October and the HM Treasury documents published the same day.
- More on this topic: what economists expect ahead of the Budget.
Source: London Business News (23.10.2026); House of Commons Library; GOV.UK.
We assess factual corrections and substantive responses. Verified changes are reflected in our reporting.
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