The government is reducing the lifetime limit for capital gains eligible for business asset disposal relief (BADR) from £1m to £500,000 from April 2027.

The Treasury said this decision will only affect one in four users of BADR, but the impact will be felt across the owner managed business community which is already dealing with the fallout from this year’s changes to business property relief and inheritance tax rules.

Chancellor John Healey stressed in his Budget speech that he wanted to prioritise business startups and scaleups, saying: ‘We want the best entrepreneurs to start, scale and stay in Britain. That’s why we’re backing businesses at every stage of growth.’

Under the reduced BADR, the majority of claimants will still receive relief on their entire gain, and the Treasury stressed this will keep the ‘focus within the tax system for the start-up and scale‑up phases of business, when most investment decisions are taken’.

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