Now officially renamed as Business Asset Disposal Relief (BADR), Entrepreneurs’ Relief is a tax relief available if you’re a UK business owner selling assets that are part of or all of your business.

Entrepreneur Relief allows you to pay a reduced Capital Gains Tax rate. This can be a huge help and allow you to maximise your profits when you sell up.

What is Entrepreneurs' Relief?

Business Asset Disposal Relief, or Entrepreneurs’ Relief, is a useful tax break you can take advantage of when you want to sell your business. This tax relief can be essential in getting as much money from the sale as possible, without having to pay more tax on it.

The break allows you to pay reduced Capital Gains Tax at a rate of 10% on qualifying gains, up to a lifetime limit of £1 million. A similar relief is available in the form of Capital Gains Tax allowance for the sale of assets outside of business.

Who qualifies for Entrepreneurs' Relief?

In order to qualify for Entrepreneurs’ Relief/Business Asset Disposal Relief, you must meet the following conditions:

  1. You must have owned your business for at least two years before an attempted sale.
  2. Your company must be a trading company or the holding company of a trading group.
  3. If you’re selling company shares, you must have been an employee or office holder of the company for at least two years before the sale or disposal.

How to calculate Entrepreneurs' Relief?

You can calculate Entrepreneurs' Relief/BADR in three simple steps:

1) Add together capital gains

Calculate your total gain by adding all capital gains and subtracting any capital losses.

2) Subtract your Capital Gains Tax allowance

Take away your annual Capital Gains Tax allowance. This is £12,300 for the 2024/25 tax year.

3) Calculate your tax

You pay 10% tax on the remaining amount.

Fancy an example? Let’s say you sell your business and make £500,000. You have no capital gains or losses and the Capital Gains Tax allowance is £12,300, so your taxable gain is £487,700. At a Capital Gains Tax rate of 10%, you owe £48,770 in tax.

How to claim Entrepreneurs’ Relief?

If you’re eligible for Entrepreneurs’ Relief/BADR, you can claim it up to three years after the sale or disposal of your business assets. You can do this by filling out Section A of the HS275 form on the government website or through a Self Assessment tax return.

Get in touch with us for help

If you need help with claiming Entrepreneurs’ Relief/Business Asset Disposal Relief, don’t hesitate to get in touch with us. Our team is ready and waiting to give you the guidance you need.

Entrepreneurs’ Relief - FAQs

What’s the difference between Entrepreneurs’ Relief and Business Asset Disposal Relief?

There’s no difference between Entrepreneurs’ Relief and Business Asset Disposal Relief – they’re the same thing. Originally called Entrepreneurs’ Relief, the tax break had its name changed to Business Asset Disposal Relief in 2020.

What is the three-year rule for Entrepreneurs’ Relief?

You need to claim Entrepreneurs’ Relief/Business Asset Disposal Relief within three years of the 31 January following the tax year when you made the gain.

Is there a limit on Entrepreneurs’ Relief?

The lifetime limit for Entrepreneurs’ Relief/Business Asset Disposal Relief is £1 million of qualifying gains.