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BADR tax stands for Business Asset Disposal Relief tax (previously known as Entrepreneurs’ Relief), and it’s a form of Capital Gains Tax (CGT) relief.
In short, BADR encourages business investment and growth. If you’re a higher or additional rate taxpayer, this can offer valuable tax relief when you sell or dispose of a business asset.
We know what you’re thinking – the term ‘disposal’ sounds drastic! Disposing of an asset doesn’t always mean selling it, a disposal could also mean you’ve given it away or swapped it for something else.
Either way, you could be entitled to valuable tax relief.
Essentially, Business Asset Disposal Relief reduces the CGT rate from 20% to 10%. That’s a huge reduction of 10% on qualifying assets.
The relief has a £1 million lifetime limit, meaning your potential tax savings could be up to £100,000.
You’re eligible for BADR if you are:
Companies and investors are not eligible for BADR.
To qualify for the relief, you must be a sole trader or business partner and have owned the business for at least 2 years.
If you’re looking to sell shares or securities, you must be an employee or office holder within a company that trades (rather than invests).
Business Asset Disposal Relief has a deadline of 31st January, but this is set at one year on from the tax year the disposal was made.
With TaxScouts, you can get simple, one-off tax advice from an accredited accountant – and this includes BADR tax. Get started here.
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