February 2026

The BADR Landscape is Changing

Selling your business? The BADR landscape has changed, plan accordingly.

If you’re planning an exit, Business Asset Disposal Relief (BADR) can still make a meaningful difference to what you take home, but the numbers and scrutiny have shifted.

The current Capital Gains Tax rate under BADR is 14%, rising to 18% next tax year. That makes early planning more important than ever.

But here’s what many business owners underestimate: BADR isn’t automatic.

You must meet strict conditions around shareholding, employment status, trading activity and timing. Increasingly, transactions involve seeking advance clearance from HMRC.

As part of that process, a detailed valuation is often submitted alongside the application. That valuation needs to be robust, commercially realistic and technically defensible, because it forms part of the evidence base HMRC reviews.

If the numbers don’t stack up, the risk sits with you. This becomes even more important in structures such as Employee Ownership Trusts (EOTs), where the rules are tighter and HMRC scrutiny can be even greater. Valuation methodology and supporting rationale really matter in those cases.

Too often, business owners only consider this once a deal is already in motion. By then, flexibility is limited and options can narrow quickly.

At RfM Transform, we support business owners with independent valuations prepared with tax planning, HMRC clearance processes and transaction scrutiny in mind.

If an exit is even on your radar in the next few years, early advice can materially change the outcome.

For your free consultation on business valuations email Tony @ tbackhouse@rfm-more.co.uk