BADR associated disposals

Business Asset Rollover Relief (BADR) is the renamed Entrepreneurs’ Relief. The name change does not affect the operation of the relief. BADR applies to the sale of a business, shares in a trading company or an individual’s interest in a trading partnership. Where this relief is available CGT of 10% is payable in place of the standard rate. There are a number of qualifying conditions that must be met in order to qualify for the relief.

You can currently claim a total of £1 million in BADR over your lifetime. The £1m lifetime limit means you can qualify for the relief more than once. The lifetime limit may be higher if you sold assets before 11 March 2020.

One of the categories for claiming BADR concerns assets owned by the seller personally but that are used in a business carried on by either:

1. a partnership of which they are a member, or
2. by their personal trading company in which the seller is an officer or employee.

The disposal will only qualify as long as it’s associated with a qualifying disposal of either the sellers’ interest in the partnership or of shares or securities in the company.

BADR on the sale of an associated asset where say a property owner received full market rent from his company for use of the property, may restrict entitlement to BADR. Directors with commercial property often pay themselves a full market rent for use of the property as there is no NIC charge, but they may not have considered the loss of BADR when the property is subsequently sold. 

Claims for BADR are made either through the taxpayers Self-Assessment tax return or by filling in Section A of the Business Asset Disposal Relief help sheet. The deadline for claiming relief for the 2020-21 tax year is 31 January 2023.