How to Avoid Capital Gains Tax | Business Asset Disposal Relief

Avoiding capital gains tax is not the same as evading it. In this video we will explain how to avoid capital gains tax (legally) by using a relief called BADR.
As the name suggests, capital gains tax (CGT) is a tax on capital gains. Capital is wealth in the form of money or property that is used to make more wealth, and a gain is an increase in the value of that wealth.

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⏱️ Time Stamps:
0:37 - A refresher on capital gains tax (CGT)
2:57 - What exactly is BADR (Business Asset Disposal Relief)?
4:09 - Who and what qualifies for BADR?
5:41 - How much tax can you avoid with BADR?

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Business Asset Disposal Relief was previously known as Entrepreneurs Relief and renamed in 2020. It is in effect a capital gains tax relief, the key word being relief here.

The effective rate of capital gains tax with business asset disposal relief is 10%.

And it allows each individual UK taxpayer to have lifetime capital gains of £1million taxed at just 10%.

BADR applies in certain situations, and the 2 most common are as follows:

★ When you dispose, that is sell the shares in your company business and realise a capital gain on the sale
☆ When you dispose of your company shares when you’ve stopped trading and decide to liquidate your company and there are substantial funds it can distribute to you as a shareholder.

And if you are sole trader or partnership based business, you can get business asset disposal relief under S169I(2)(a) and (b) of the Taxation of Chargeable Gains Act 1992 in similar circumstances as above 2 points.

You can save a significant amount of tax if you qualify for and apply business asset disposal relief. So it is a option well worth educating yourself about, and pursuing if your numbers work.
I’ll help you get an idea of ‘significant’ with a common numerical example I have come across in years of practice, in the video.

We hope this video will help you understand how to avoid capital gains tax using BADR and taken you one step closer to knowing your numbers.


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Our videos are for general guidance, education and empowerment in helping you understand accounting, tax and your numbers. They in no way constitute specific advice to your specific circumstances. Me & my team would be delighted to help you with your specific queries or accounting requirements through a formal engagement.

#capital gains tax #how to avoid capital gains tax