- The Chancellor has announced an increase to the CGT rates where Business Asset Disposal Relief (BADR) and Investors' Relief (IR) apply, from 10% to 14% from 6 April 2025 and a further increase to 18% from 6 April 2026.
- BADR is a CGT relief which reduces the CGT rate on qualifying gains made on disposal of eligible business assets from 24% to the rates set out above. Various conditions must be met to qualify for the relief.
- Broadly, BADR is available to individuals who are actively involved in a business, whether as a sole trader, a partner in a partnership or via a company.
- BADR is also available to individuals disposing of shares acquired on the exercise of qualifying enterprise management incentive (EMI) employee share options where there are at least two years between the date of grant of the EMI option and the sale of the shares acquired on option exercise.
- Each individual is able to claim BADR on up to £1m of gains in a lifetime. Trustees can claim BADR if certain conditions are met, which include the trustees having an interest in a business in which a trust beneficiary is personally eligible for BADR.
- A different relief, IR, is available in certain circumstances and also results in a reduced CGT rate on up to £1m of qualifying gains over an individual’s lifetime. Broadly, IR is available on gains made on disposal of shares in a qualifying unlisted trading company where an individual who made the gain subscribed for the shares and is neither an employee nor a paid director of a company.
- Timing: The increase in the CGT rate to 14% where BADR or IR applies will take effect from 6 April 2025. The increase in the rate to 18% will take affect from 6 April 2026.
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