Business Asset Disposal Relief

Business Asset Disposal Relief 

 

If you find yourself in a position whereby you need or want to sell or close your solvent company, a Members Voluntary Liquidation (MVL) offers your business the formal solution needed, whilst extracting any proceeds in a tax-efficient way. Following the formal liquidation of the company, you may be eligible to claim for Business Asset Disposal Relief (BADR). 

 

What is BADR? 

BADR is a tax relief, reducing the amount of capital gains tax payable by sole traders, company directors, and partners who sell or dispose of a trading business. 

 

Eligibility 

To check if your business is eligible, please go the gov.uk website or paste the link. Please note we are unable to provide you with any tax advice, but this can be sought from your own financial advisors. 

Business Asset Disposal Relief: Eligibility - GOV.UK 

 

Spring Budget 2024 changes 

It was announced in the October budget that the tax rate of capital gains tax is to be increased from 10% to 18%, for the lower rate and from 20% to 24% at the higher rate. It was confirmed that the lifetime limit for BADR will remain at £1,000,000. 

 

Implications 

These higher tax liabilities will have a significant impact on those company’s wishing to enter and/or finalise MVL’s ahead of the changes this year. An incremental rise to 14% will come into force in April 2025, with the full 18% increase in 2026. 

 

If you are considering closing/selling your company and want to take advantage of the current 10% BADR, then contact us at Smith & Barnes Insolvency Practitioners to discuss the full options and support available to you.