BADR 2026 Rate Change: The 18% Rate, the Dates and the Anti-Forestalling Rules

The BADR 2026 rate change is now in force. Since 6 April 2026, Business Asset Disposal Relief taxes qualifying gains at 18%, the last step in a schedule that took the relief from 10% to 18% in eighteen months. For anyone selling or winding up a business in 2026/27 the live questions are no longer about beating a deadline: they are which rate a given disposal actually gets under the timing rules, what the anti-forestalling legislation blocks, and what the relief is still worth against the standard rates. This page covers the rate change itself; the qualifying conditions and the traps an adviser checks are covered separately in our BADR accountant guide.

The 10% to 14% to 18% Schedule, With Exact Dates

The full schedule, announced at Autumn Budget 2024 and legislated in Finance Act 2025:

Disposal date	BADR rate	Standard CGT rates in force
Up to 5 April 2025	10%	18% / 24% from 30 Oct 2024 (10% / 20% before)
6 April 2025 to 5 April 2026	14%	18% / 24%
On or after 6 April 2026	18%	18% / 24%

The £1 million lifetime limit runs through all three periods unchanged. Investors' Relief follows the same 14% then 18% schedule, with its own lifetime limit cut to £1 million for disposals from 30 October 2024. The standard rates, the £3,000 annual exempt amount and how BADR gains interact with the basic rate band are set out in our guide to capital gains tax rates 2025/26 and 2026/27.

Note what the 18% rate means structurally: a basic rate taxpayer's standard CGT rate is also 18%, so BADR now only saves tax against the 24% higher rate band. The relief went from a 14 point advantage in 2024/25 to a 6 point advantage today.

How the Disposal Date Is Fixed: Section 28 and Completion

For CGT, the disposal date under an unconditional contract is the date of exchange, not completion (section 28 TCGA 1992); a conditional contract disposes on the date the condition is satisfied. That rule decided which side of each April step a sale fell. A share sale exchanged on 20 March 2026 and completed in May 2026 is, under the general rule, a 2025/26 disposal at 14%.

That is exactly the door the anti-forestalling legislation part-closes.

The Anti-Forestalling Rules in Finance Act 2025

Schedule 2 of Finance Act 2025 contains targeted rules for arrangements designed to capture the 10% or 14% rates ahead of each step (HMRC guidance at CG10249 to CG10251):

• Straddling unconditional contracts. Where a contract was exchanged before a rate-change date but completed on or after it, the disposal is treated as taking place at completion for the purpose of the CGT rate, overriding section 28 for that purpose only. So a contract exchanged in 2025/26 completing after 6 April 2026 is charged at 18%, not 14%, by default.
• The excluded contract escape. The completion-date rule does not apply where the contract was entered into with no purpose of obtaining a tax advantage from the section 28 timing rule, and, where the parties are connected, was entered into for wholly commercial reasons. A genuine arm's length sale that happened to exchange in March and complete in April keeps its exchange-date rate.
• The statement requirement. Relying on the exclusion requires a statement in the self assessment return (white space or attachment) that the contract had no tax-timing purpose, unless total gains on such contracts are no more than £100,000.
• Share exchanges and section 169Q elections. On a share-for-share exchange, gains are normally rolled into the new shares; a section 169Q election disapplies that rollover to crystallise the gain and bank BADR at the old rate. For exchanges on or after 30 October 2024, an election no longer locks the rate at the exchange date: the crystallised gain is charged under the rules in force when the election is made. Exchanging into a holding company in early 2025 and electing now still produces an 18% charge.

The practical summary for 2026/27: the 14% rate is only still reachable for a disposal genuinely made before 6 April 2026 under the ordinary rules, including a straddling contract that qualifies as an excluded contract. Nothing signed or elected today can reach it.

Worked Numbers: The Same Gain at 14%, 18% and Without Relief

Each computation deducts the £3,000 annual exempt amount first, and assumes the gain is fully within the £1 million lifetime limit. The comparison column is a higher rate taxpayer without BADR at 24%.

Qualifying gain	Chargeable	2025/26 at 14%	2026/27 at 18%	No BADR at 24%	Cost of the step
£100,000	£97,000	£13,580	£17,460	£23,280	£3,880
£400,000	£397,000	£55,580	£71,460	£95,280	£15,880
£1,000,000	£997,000	£139,580	£179,460	£239,280	£39,880

Two readings of the same table. Against last year, the step costs 4 points, just under £40,000 at the full lifetime limit. Against no relief at all, BADR in 2026/27 is still worth 6 points, £59,820 on a £1 million gain, which is why qualifying (and claiming by the deadline) matters more than mourning the old rate.

MVL Distributions: The Date That Sets the Rate

A recurring question from company owners closing up through a members' voluntary liquidation: if the reserves were earned back when BADR was 10% or 14%, is some of the money taxed at the old rates? No. Each capital distribution in a winding up is a disposal (or part disposal) of the shares dated when the distribution is made. Reserves earned in 2023 and distributed in 2026/27 are charged at 18% if BADR applies, in full; there is no tracing of the cash back to the years the profits arose. A liquidator making distributions either side of a 5 April can produce two rates on one liquidation, which is a genuine timing point to plan with the liquidator, but the company's earning history is irrelevant. The wider choice between an MVL, a strike-off and a sale is compared in selling a business: tax, CGT and BADR, and the anti-phoenixing rule that polices MVLs is covered in the adviser checklist.

Planning That Still Works After the Rise

The rate schedule is done moving; no further BADR rate change is currently legislated. What remains is ordinary, legitimate planning under the settled rules:

• Two spouses, two limits. An outright transfer of shares between spouses is no gain no loss, and each spouse has their own £1 million lifetime limit, but the recipient must independently satisfy the personal company, officer-or-employee and 2 year conditions before their disposal. Started early, this can take a joint exit of up to £2 million of gains at 18% rather than 24%.
• Ordering losses and the exempt amount. Set capital losses and the £3,000 exempt amount against standard-rate gains before BADR gains: relief at 24% beats relief at 18%.
• Banking the limit across years. Phased disposals can spread gains across tax years and annual exempt amounts; the mechanics are in BADR across multiple tax years.
• Keeping the conditions alive. The most valuable planning is defensive: not resigning before completion, not letting surplus cash erode trading status, checking the 5% tests after any restructure.

What does not work: engineering a disposal date backwards. Backdating, conditional contracts contrived to complete early, and post-hoc section 169Q elections are precisely what Schedule 2 and the exchange-election rule were written for.

What the Rate Change Did Not Touch

Everything else about BADR survived April 2026 intact: the £1 million lifetime limit (fixed since March 2020, not indexed), the 5% personal company tests and their proceeds-entitlement alternative, the EMI exception, the 2 year qualifying period, the trading company requirement, the 3 year window after cessation for sole traders and partners, and the claim deadline of the first anniversary of the 31 January following the tax year of disposal. A director in Preston asking whether the goalposts moved as well as the rate can be told plainly: the conditions are the same, they are simply worth 6 points now instead of 14.

What to Do in 2026/27

Model any planned exit at 18% and check the claim mechanics early: for a 2026/27 disposal the return is due by 31 January 2028 and the BADR claim by 31 January 2029. If you exchanged before 6 April 2026 and completed after, take advice on the excluded contract position and the return statement before filing. And if the numbers matter to a decision you have not yet made, run them through our BADR CGT calculator or talk to us; Holloway Davies models disposals under the current rates and handles the claim end to end.