Business Asset Disposal Relief BADR
Contents |
[edit] Introduction
Prior to 6 April 2020, Business Asset Disposal Relief (BADR) was known as Entrepreneurs’ Relief. The name was changed under the Finance Act 2020.
BADR is a source of capital gains tax (CGT) tax relief that supports entrepreneurs in their efforts to improve and invest in their businesses. It does this by reducing the amount of CGT on qualifying capital gains to 10% on the disposal of qualifying business assets on or after 6 April 2008.
BADR may be beneficial when the proceeds of the disposal of the asset would otherwise push the business owner into a higher tax band. Qualifying capital gains for each individual are subject to a lifetime limit as follows, for disposals on or after:
- 6 April 2008 to 5 April 2010, £1 million.
- 6 April 2010 to 22 June 2010, £2 million.
- 23 June 2010 to 5 April 2011, £5 million.
- 6 April 2011 to 10 March 2020, £10 million.
- 11 March 2020, £1 million.
[edit] Eligibility
BADR applies to qualifying disposals of business assets under:
- A sole trade and its assets.
- Partnership interests and assets.
- Shares in a self-owned company.
- Joint venture interests.
- Business assets held by a trust
In order to be eligible for BADR, the business owner must meet certain conditions throughout a two year qualifying period (either up to the date of disposal or the date the business ceased). The business owner must dispose of business assets within three years to qualify for relief.
BADR is available to CGT disposals made by individuals and some trustees of settlements, but it is not available to companies or in relation to a trust where the entire trust is a discretionary settlement. Personal representatives of deceased persons can only claim if the disposal took place whilst the deceased person was alive.
[edit] Making claims
Spouses or civil partners are separate individuals and may each make a claim. They are each entitled to BADR up to the maximum amount available for an individual, provided that they each satisfy the relevant conditions for relief.
BADR must be claimed, either by the individual or, in the case of trustees of settlements, jointly by the trustees and the qualifying beneficiary. The claim must be made to HMRC in writing by the first anniversary of the 31 of January following the end of the tax year in which the qualifying disposal takes place. A claim to BADR may be amended or revoked within the time limit for making a claim.
[edit] Related articles on Designing Buildings Wiki
- Capital gains tax.
- Finance Act.
- Rate relief schemes.
- Taxes associated with selling a business.
- Tax relief.
[edit] External resources
- Gov.uk, Capital Gains Manual.
Featured articles and news
Introducing or next Guest Editor Arun Baybars
Practising architect and design panel review member.
Quick summary by size, shape, test, material, use or bonding.
Types of rapidly renewable content
From forestry to agricultural crops and their by-products.
Terraced houses and the public realm
The discernible difference between the public realm of detached housing and of terraced housing.
Put digitalisation and sustainability at the core of curricula
Project management educators are urged.
Looking back at the influence of climate events
From a designer and writer: 'There are limits to growth but no limits to development'.
Terms, histories, theories and practice.
Biophilic design and natural light
Letting in the light and natural elements into spaces.
APM Programme Management Conference 2024
Strategies for Success.
Residential takes the reins as contract awards even out
Contracts down, but remain above the last quarter of 2023.
Celebrating Eid and the largest mud-brick building.
Barry Kingscote claims prestigious CIOB CMYA Award.
The British Mosque: an architectural and social history
The story of some 1,500 mosques or more in Britain.
Heat pump refrigerants, efficiencies and impacts
R12 to R1270 what are the differences?
Global heat pump market in 2023
Challenging times with positive but modest outlook.
Beyond the infrastructure pipeline
Opportunities and chokepoints.