Tax Relief Changes for Business Reorganisation | BADR and Business Tax: What you need to know!

In the past few years, business owners have faced constant changes and challenges with regards to taxes which is particularly relevant when it comes to the process of business reorganisation. However, different tax relief options and in particular Business Asset Disposal Relief (BADR) have been specifically introduced, to ease some of the financial burden that businesses face during restructuring. Here is what you need to know about BADR and how you can use it if you are looking to restructure your business.

What is Business Asset Disposal Relief (BADR)?

 Business Asset Disposal Relief was previously known as Entrepreneurs’ Relief and provides a reduced rate of Capital Gains Tax (CGT) on the sale of business assets. For individuals who qualify, the rate drops to 10%, which in turn can save a business thousands of pounds when it comes to the sale of shares or assets of a business!

Who can use Business Asset Disposal Relief (BADR)?

BADR is available to sole traders, partners, or shareholders in a business that is being reorganised or sold, however this is providing specific conditions are met.

What are the recent changes in Tax Relief for Business Reorganisation?

The government has introduced changes to tax reliefs, which focus on making business transitions smoother. One of the most significant changes, includes the simplification of the criteria for qualifying for BADR. This allows more businesses undergoing restructuring to benefit from the relief. Additionally, changes to the way businesses are reorganised may result in more favourable tax treatment for businesses that restructure instead of liquidating.

Under these changes, businesses involved in corporate reorganisations can potentially enjoy better tax positions. If your business is being restructured or sold, and you’re looking at BADR, it’s important to consult with a tax advisor to ensure you meet the necessary conditions.

With the rates due to change next month, it is important to note that as of the 6th April 2025, the rates change to 14%, with a further increase to 18% being implemented on 6th April 2026. (these rates only apply for lifetime gains up to £1m). 

Why Is This Important?

Understanding the tax relief options available during business reorganisation can significantly impact the financial outcome for business owners and stakeholders. The introduction of more accessible tax reliefs like BADR means that businesses have more opportunities to reduce the tax burden when going through changes. Whether you're selling part of your business, transferring shares, or undergoing a full restructuring, taking advantage of tax reliefs can lead to substantial savings.

How our specialist Business Solicitors can help.

If you're considering a business reorganisation, it's crucial to understand the available tax reliefs and how they can benefit your individual situation. It is also worth highlighting that with the rates due to increase further over the next couple of years – if you are considering this option, it would be better to act sooner rather than later. BADR, along with other tax incentives, is designed to ensure that business owners are not overly burdened during the challenging and often overwhelming process of restructuring.

By staying informed and consulting with a specialist solicitor, you can make the most of these tax-saving opportunities. If you need further advice when it comes to company restructuring and reorganising, our team are here to help, ensuring the best possible outcome for you and your business. Just call us on 01926 491181 or email: TimO@moore-tibbits.co.uk.