UK Business Asset Disposal Relief Calculator

BADR applies an 18% capital gains tax rate to the first £1 million of qualifying gains across your lifetime, for disposals on or after 6 April 2026. That is up from 14% in 2025/26 and 10% before April 2025. On a fully qualifying £1 million gain, the tax is £180,000, saving £60,000 against the £240,000 that would be due at the standard 24% higher rate. Gains above the £1 million limit are taxed at the ordinary CGT rates with no BADR benefit.

£1 million of qualifying gains, cumulative across your lifetime. It was reduced from £10 million to £1 million for disposals on or after 11 March 2020 and has stayed there. The limit counts every claim you have ever made, including earlier claims under the Entrepreneurs' Relief name, so if you have claimed before, only the balance of your £1 million is available. It is measured on gains, not on sale proceeds.

The ordinary capital gains tax rates. For 2026/27 that is 24% for higher and additional-rate taxpayers and 18% for any part of the gain falling within your remaining basic-rate band. Most founders selling a business have income and gains that place the excess firmly in the 24% band. The calculator applies your selected band to the portion above the £1 million limit.

In two steps announced at the Autumn 2024 Budget. The rate was 10% for well over a decade, rose to 14% for disposals from 6 April 2025, and rose again to 18% for disposals from 6 April 2026. The lifetime limit stayed at £1 million throughout. The effect is that a fully qualifying £1 million gain now costs £180,000 in tax, compared with £100,000 under the old 10% rate — the relief has become £80,000 less valuable in two years.

Throughout the two years ending on the disposal date you must be an officer or employee of the company, the company must be a trading company or the holding company of a trading group, and you must hold at least 5% of the ordinary share capital and voting rights plus entitlement to at least 5% of profits and assets (or 5% of sale proceeds). Failing the two-year period — often after a recent share reorganisation or new incorporation — is the most common reason a claim is refused.

They can. Because the rate rose on 6 April 2025 and 6 April 2026, HMRC introduced anti-forestalling rules so that where an unconditional contract is entered into before a rate change but completes afterwards, the disposal is generally treated as happening on completion, and the higher rate applies — unless you can show the contract was not made to obtain a tax advantage, with extra conditions for connected parties. You cannot sign a contract to lock in an old rate and complete later expecting that rate.

The annual exempt amount for 2026/27 is £3,000, and it reduces your taxable gains before the BADR rate is applied. Where you have both qualifying and non-qualifying gains, you generally set the exemption and any capital losses against the non-qualifying gains first, to preserve as much of the 18% BADR rate as possible. This calculator applies the £3,000 exemption to the qualifying gain you enter.

Yes on the UK side, regardless of nationality, provided the conditions are met. But a US citizen or Green Card holder also pays US capital gains tax on the same gain — generally 20% plus the 3.8% net investment income tax, so 23.8% — because the US taxes worldwide gains. The UK CGT is credited against the US tax, but because BADR reduces the UK rate to 18%, there is less UK tax to credit against the higher US rate, which can leave a US top-up bill. The calculator estimates this when you select the US-citizen option.

Because the US foreign tax credit only offsets US tax up to the amount of UK tax actually paid. BADR at 18% produces less UK tax than the standard 24% rate, so a US-citizen founder has a smaller credit against a US rate of up to 23.8% and pays the difference to the IRS. A British co-founder taxed at 18% is simply done. In some cases a higher UK rate that generates more creditable tax leaves a US citizen better off overall — which is why the two returns should be modelled together before completion.

Almost never. The US section 1202 exclusion requires stock in a domestic US C corporation, and shares in a UK limited company do not qualify. A UK company is typically a passive foreign investment company or a controlled foreign corporation for US purposes, which brings extra reporting rather than an exclusion. So a US-citizen founder usually has no US-side relief to match BADR, which makes the foreign tax credit position the central planning point.

Yes — Business Asset Disposal Relief is the current name for what was Entrepreneurs' Relief until it was renamed in the 2020 Finance Act. The conditions are broadly the same, but the lifetime limit was cut from £10 million to £1 million in March 2020 and the rate has since risen from 10% to 14% and then 18%. Any relief claimed under the old Entrepreneurs' Relief name counts toward your £1 million lifetime limit today.

For a disposal in 2026/27, the CGT is reported on your self-assessment return and due by 31 January 2028. A US-citizen founder pays US tax on the same gain with their 2026 US return, generally due in 2027 — so the two systems tax the gain in different years and translate it at different exchange rates. That timing mismatch can strand foreign tax credits in the wrong year, which is why cross-border exit timing needs planning before you sign, not after.