HMRC has identified taxpayers who have exceeded the £1m lifetime limit but still made claims for BADR, previously known as entrepreneur's relief, in their 2022-23 tax returns.

The wealth team has rooted out taxpayers who exceeded the lifetime limit in the 2022-23 tax year, or had already done so in an earlier tax year.

The limit was reduced from £10m to £1m on 11 March 2020. Taxpayers who have already claimed £1m or more before this date have already reached their limit, meaning ‘you will not be able to claim any future BADR’, HMRC said.

The letter states: ‘Our records show that you’ve exceeded the lifetime limit of £1m prior to submitting your latest self assessment return.

‘This means your claim is unlikely to be accepted and you’ll need to pay tax on the capital gain at the normal capital gains tax rates.’

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