Capital Gains Tax

Business Asset Disposal Relief UK — BADR for Landlords and Property Investors

Business Asset Disposal Relief (BADR), formerly Entrepreneurs' Relief until Finance Act 2020, is a CGT relief under TCGA 1992 s.169H reducing the CGT rate to 10% on qualifying gains from the disposal of a business or business assets. Lifetime limit: £1 million per individual (reduced from £10 million by Finance Act 2020). For buy-to-let landlords: standard residential letting is an investment activity not a trade — does NOT qualify for BADR. Qualifying property-related disposals: (i) genuine property development/trading business (buy, develop, sell); (ii) shares in a qualifying personal trading company (not an investment company) — 5% shares + 5% votes + 5% profits/assets entitlement + director/employee for 2 years; (iii) commercial property used in a qualifying trade where sold with or following the business; (iv) furnished holiday lets (FHL) until 5 April 2025 — FHLs were treated as a qualifying trade. FHL abolition: Finance Act 2024 abolished the FHL regime from 6 April 2025 — FHL properties disposed of after 5 April 2025 no longer qualify for BADR; the 18%/24% main CGT rates apply (from 30 October 2024 Autumn Budget). Alternative reliefs: private residence relief (TCGA 1992 s.222); spousal transfer at nil gain/nil loss (s.58); annual exempt amount (£3,000 from 2024-25); holdover relief on gifts of qualifying business assets. 60-day CGT reporting obligation for residential property disposals.

12 min readUpdated 7 June 2026Last reviewed: 17 May 2026business-asset-disposal-relief-propertyentrepreneurs-relief-landlordbadr-buy-to-letbadr-furnished-holiday-let

BADR Qualifying Conditions and the Trading vs Investment Distinction

BADR charges qualifying gains at 10% CGT. Lifetime limit: £1 million per individual from Finance Act 2020 (maximum saving ~£140,000 at 24% rate less 10% = 14% × £1m). Qualifying conditions for sole traders/partners: qualifying trade (not an investment business); owned and carried on throughout the 2 years before disposal. Personal company shares: at least 5% ordinary shares + 5% voting rights + 5% distributable profits entitlement + 5% of assets on winding-up (Finance Act 2019); director or employee for 2 years before disposal; company must be a trading company or holding company of a trading group. Property investment: passive residential letting is investment, NOT a trade — does not qualify for BADR regardless of portfolio size. FHL abolition: from 6 April 2025 (Finance Act 2024), FHL properties are no longer treated as a trade for BADR — disposals after 5 April 2025 are taxed at main CGT rates (18%/24% from 30 October 2024). Property development/trading may qualify: if the primary activity is developing and selling property (not holding for rental), the business may be a qualifying trade.

Alternative CGT Reliefs for Property Landlords

Where BADR does not apply, landlords should consider: private residence relief (PRR — TCGA 1992 s.222): gain attributable to periods of main residence occupation is exempt; final 9 months exempt regardless of use; letting relief largely abolished (only for co-habiting landlord/tenant); spousal transfer (TCGA 1992 s.58): transfers between spouses/civil partners at nil gain/nil loss — useful for utilising a lower-rate taxpayer's annual exempt amount and CGT rate on subsequent disposal; annual exempt amount: £3,000 per individual per tax year from 2024-25; holdover relief (TCGA 1992 s.165): gifts of trading business assets — not available for standard investment property portfolio; rollover relief (TCGA 1992 ss.152–159): reinvestment of proceeds from qualifying business asset into another qualifying business asset — requires a trade, not property investment; 60-day CGT reporting obligation for residential property disposals (Finance Act 2019): report and pay within 60 days of completion; penalties for late compliance.

Frequently asked questions

Can buy-to-let landlords claim BADR?+

In most cases, no. Standard residential letting is an investment activity, not a trade. BADR requires a qualifying trade (or shares in a trading company). Passive buy-to-let does not qualify regardless of portfolio size.

Did furnished holiday lets qualify for BADR?+

Yes, until 5 April 2025. FHLs were treated as a qualifying trade for BADR. The Finance Act 2024 abolished the FHL regime from 6 April 2025 — FHL disposals after that date no longer qualify and are taxed at the main CGT rates.

What is the BADR lifetime limit?+

£1 million per individual from Finance Act 2020 (reduced from £10 million). Once the lifetime limit is fully used, further qualifying gains are taxed at the main CGT rates (18%/24% from 30 October 2024).

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