You shook hands on the sale of your business in March. Contracts signed, completion pencilled in for September. BADR was 14% when you agreed the deal and 18% from 6 April. Which rate do you actually pay? Two rules pull in opposite directions — and there’s an escape route you have to claim in writing.
Where BADR sits now
BADR is the rebadged Entrepreneurs’ Relief, set out in TCGA 1992 Part V Chapter 3 (ss.169H–169S). It gives a reduced CGT rate on qualifying disposals of trading businesses, shares in personal companies and certain associated assets, subject to a £1 million lifetime cap. The rate has been on an upward march:
| Period | BADR rate |
| Up to 5 April 2025 | 10% |
| 6 April 2025 to 5 April 2026 | 14% |
| From 6 April 2026 | 18% |
Against the main higher-rate CGT charge of 24%, BADR still saves a qualifying seller 6 percentage points on gains up to the £1m cap — worth up to £60,000 on a fully-used allowance. Valuable, but a fraction of what Entrepreneurs’ Relief used to deliver.
The general rule: contract date wins
For capital gains tax, the disposal date is the date the contract becomes unconditional — not the date completion actually happens. The rule is in TCGA 1992 s.28(1):
“…where an asset is disposed of and acquired under a contract the time at which the disposal and acquisition is made is the time the contract is made (and not, if different, the time at which the asset is conveyed or transferred).”
The counterpoint is s.28(2): if the contract is conditional, the disposal date moves to when the condition is satisfied. So “unconditional” is the statutory hinge, not a throwaway word. It means all key commercial terms are agreed, both parties are fully bound, and there are no outstanding conditions precedent. Administrative tidying-up — stock transfer forms, share register updates, Companies House filings — doesn’t change the position; whether either side could still walk away without breach is what matters.
Applied straight, a deal made unconditional on 30 March 2026 is a 2025/26 disposal at 14%, even if completion is months later. That’s the default — but not the whole story.
The anti-forestalling override
Finance Act 2025, which legislated the rate rises, also introduced anti-forestalling rules to stop sellers dating contracts just ahead of a rate increase to lock in the lower rate. The default under those rules is this: where an unconditional contract is agreed before the rate change but completion occurs after it, the BADR rate in force at completion applies. Left alone, every pre-6-April-2026 deal that completes later would be pulled up to 18%.
The escape route: genuine commercial purpose
There’s a carve-out. If the contract was not entered into with the purpose of obtaining a tax advantage from the timing rule — in other words, if the deal was agreed for normal commercial reasons (price, fit, due diligence timing, funding windows) and the contract date just happens to fall before 6 April — the anti-forestalling override doesn’t bite, and you keep the pre-change rate.
Critically, this treatment is not automatic. The individual making the disposal must make a formal claim to disapply the anti-forestalling rules (HMRC’s guidance sets out the mechanics). Expect HMRC to look closely at the surrounding facts: when negotiations started, evidence of draft documents, whether any conditions were only symbolic, board minutes, funding letters, and the rest.
One simplification: if the total qualifying gains in the tax year are less than £100,000, no claim is needed and the original contract date applies automatically. Small deals escape the paperwork. For most owner-manager exits, however, the gains will be well above the threshold and a claim will be the only route to the lower rate.
Three moves if you have a deal in flight
- Pin down the contract date. Was the contract genuinely unconditional on signing, or were there conditions precedent (regulatory approvals, finance, third-party consents) that pushed the effective date later? Get it confirmed by the transaction lawyers — it determines which rate you’re arguing about.
- Preserve evidence of commercial purpose. Negotiation emails, bid letters, board minutes, draft SPAs, funding decisions — any paper trail showing the deal was agreed on its own merits strengthens a disapplication claim.
- Model both rates. At 18% versus 14% on £1m of gain, the difference is £40,000 — often the gap between fully funding the next venture and trimming the plan.
How we can help
BADR claims on business sales are an area where rates, timing and anti-forestalling rules interact in ways that reward preparation and punish improvisation. We work with owner-managers through the life of a deal — structuring the transaction, preparing the BADR claim and, where relevant, the anti-forestalling disapplication claim with the supporting evidence file. If you’ve got a sale in progress or on the horizon, get in touch. We’ll answer the phone.
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