Selling or closing your business? Business Asset Disposal Relief halves on 6 April 2027

By James Fitzpatrick, AAT licensed · Accounting Solution · November 2026 · 3 min read

From 6 April 2027 the lifetime limit on Business Asset Disposal Relief halves, from £1 million of gains to £500,000. The rate stays at 18%. If you expect more than £500,000 of gains from selling or closing a business, the excess will be taxed at 24%, and the date of the disposal decides which limit you get.

What the Budget changed

In the Budget on 28 October 2026 the Chancellor announced that the lifetime limit will fall for qualifying disposals made on or after 6 April 2027. The legislation is due in the Finance Bill 2026-27, so the detail can still move before it becomes law.

Nothing else about the relief changed. The rate is 18% for disposals from 6 April 2026, up from 14% in 2025/26 and 10% before that. The main Capital Gains Tax rates of 18% and 24%, and the £3,000 annual exempt amount, were also left as they were.

What it costs

The extra tax is 6% of the qualifying gains above £500,000, the gap between 24% and 18%. Here it is in pounds.

Assumes you have claimed no relief before, that you pay 24% on anything outside the relief, and ignores the £3,000 allowance. Gains you have already claimed relief on count against the limit.

Who can claim

The relief is for people selling or closing a trading business. The main tests are:

• Sole trader or partner: you have owned the business for at least two years up to the sale. If you close it instead, the same test applies and you must dispose of the business assets within three years.
• Shares in a company: you have been an employee or office holder for at least two years up to the sale, and the company is a trading company or the holding company of a trading group.
• Personal company: for those two years you hold at least 5% of the shares and voting rights and are entitled to at least 5% of the distributable profits and of the assets on a winding up.

A business that mainly lets property or holds investments usually does not qualify, because its main activity is not trading.

Which date counts

For an unconditional contract the date of disposal is normally the date the contract is made, not the date it completes. If the contract is conditional, it is the date all the conditions are met. HMRC sets this out in its Capital Gains Manual at CG14250.

So a sale agreed by unconditional contract before 6 April 2027 falls under the £1 million limit even if the money arrives later. Be careful with conditions such as due diligence, finance or regulatory approval, because they can push the date later than you expect. Do not give away price or terms just to beat the date: the cost of missing it is the 6% on gains above £500,000, which the table above shows.

Closing a company instead of selling it

Payments to shareholders in a members' voluntary liquidation are taxed as capital, so the relief can apply and the same limit rules apply. The anti-avoidance rule bites if you carry on a similar trade within two years: HMRC can then tax the payout as income. A liquidation also needs a licensed insolvency practitioner, so talk to us before you commit to the route.

What to settle now

• How much relief have you used? Earlier claims count against the limit.
• Who holds the shares? Each person has their own limit, but each must meet the tests in their own right. Adding a spouse as a shareholder days before a sale does not do it.
• Is the contract conditional? The conditions decide the date.
• What else sits in the company? If cash, investments or rental property are a large part of what it does, the trading test can fail.
• Who will claim? The relief is not automatic. It is claimed on your Self Assessment return or on HMRC's helpsheet.

Sources: Business Asset Disposal Relief · Business Asset Disposal Relief lifetime limit reduction · Capital Gains Tax rates · HMRC manual CG14250: date of disposal. General guidance on the rules at 12 November 2026; your own facts decide the answer.