Business Asset Disposal Relief (BADR) has risen from 14% to 18% on the first £1m of qualifying gains since 6 April—the latest step in a long retreat from the policy’s original 10% rate on lifetime gains up to £10m. The rate has climbed 80% over the past decade, and 28% in this single adjustment alone.
For owner-managers who have built companies over twenty years, the arithmetic is growing harder to justify. On a £1m sale, the journey from 10% to 18% represents an extra £80,000 to the Treasury.
Martin Rayner, director at Compton Financial Services, said the increase cannot be viewed in isolation. “BADR has now increased by 80% over the past decade and by a further 28% in this latest change alone—this is not a one-off adjustment, it’s an ever-increasing tax on entrepreneurial success,” he said. Employer NI rises and minimum wage increases already squeeze owners before exit.
Scott Gallacher, director at Leicester-based financial advisory firm Rowley Turton, said the change has a measurable cost in time. “Changes such as the increase from 14% to 18% could mean some business owners having to work an extra year just to stand still,” he said.
Steven Mather, solicitor at Steven Mather Solicitor in Leicester, highlighted the impact on larger transactions. “Three years ago, a sale at £5m would have cost £900,000 in tax. Now the same sale costs £1.14m—an extra quarter of a million for nothing,” he said. “A business owner who has worked really hard over the years, paying all the tax along the way, to get to the point of exiting and having to pay another shedload to the Government.”
Graham Nicoll, financial planner at NCL Wealth Partners, said the effect mirrors fiscal drag. “On paper, a 4% increase may not look drastic, but for every £1m of sale proceeds it is an extra £40,000 going to HMRC,” he said. “Changes in tax impacts like these will influence business owners’ thinking about timing, succession planning, structure and much more.”
Colette Mason, author and AI consultant at London-based Clever Clogs AI, pointed to a contradiction in government policy. “Just last week, the Government launched the £500m Sovereign AI fund telling AI entrepreneurs to start, scale and stay in Britain. But why would you, if the exit is being taxed so punitively?” she asked. “At some point, people do the maths and build somewhere that lets them keep the reward—and that really isn’t Britain.”