Autumn Budget 2024: Changes to Business Asset Disposal Relief (formerly Entrepreneur’s Relief)

The recent Budget introduced changes to Business Asset Disposal Relief (BADR), a relief giving business owners a lower tax burden when they dispose of qualifying business assets. With the changes to BADR it looks like the Chancellor has fired the starting gun on numerous potential business disposals.

Business asset disposal relief will remain at 10 per cent this year, before rising to 14 per cent in April 2025, and then 18 per cent from 2026/27  maintaining a significant gap compared to the higher rate of Capital Gains Tax (CGT). Retaining the 10% BADR look generous compared to the the new rates of CGT announced by the Chancellor in the Budget with a the higher rate of CGT increasing from 20 per cent to 24 per cent, and the lower rate of CGT jumping from 10 per cent to 18 per cent. 

While the uplifts in the rates of CGT will be a blow for many  investors, business owners still have a significant window of opportunity to sell any BADR qualifying assets, such as company shares in, before the BADR rises to 14% in April 2025. While corporate solicitors acting for owner manager businesses and investors experienced a sharp increase in activity in October with sellers keen to dispose of their shares ahead of the Budget in case of any potential alteration to the CGT rates and BADR in the Budget, it appears there will now be no let up for the remainder of this financial year. As a business owner or an investor, the reality is that from the period of starting due diligence on a target to completion of the transaction can often take a number of months, and so this may well be the moment to put the pedal to the metal if you want to beat the tax clock and benefit from 10% BADR. 

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The contents of this blog are a general guide only at the date of publication. It is not comprehensive, and it does not constitute legal advice. Specific legal advice should be sought in relation to the particular facts of a given situation.