Selling your IFA in the 2026/27 tax year: what the BADR change means
- Simon Bourke
- Apr 24
- 4 min read
24th April 2026
Summary
On 6 April 2026, the rate of Business Asset Disposal Relief (BADR) rose from 14% to 18%. For IFA and wealth management business owners considering a sale, this change is worth understanding before you come to market. This article explains what BADR is, how the new rate applies to the sale of a financial planning business, and when the relief will apply to a transaction.
Table of contents
What is Business Asset Disposal Relief?
Business Asset Disposal Relief (BADR), previously known as Entrepreneurs' Relief, is a Capital Gains Tax relief that can apply when an individual sells qualifying business assets or shares. Qualifying gains are subject to a lifetime allowance of up to £1 million per person.
How is selling a financial planning firm different in the 2026/27 tax year?
On 6 April 2026, the BADR rate rose from 14% to 18% for qualifying disposals. In the 2025/26 tax year, the rate was 14%. Before 6 April 2025, it was 10%.
The increase was announced by the government at the Autumn Budget 2024 as part of wider changes to Capital Gains Tax.
When does BADR apply in the sale of an IFA firm?
Please note: Below is a high-level overview of the potential tax considerations involved in an asset sale or share sale. It does not constitute tax advice and should not be relied upon as such. Business owners considering or undertaking a transaction should seek advice from an accountant based on their specific circumstances.
Whether BADR is relevant to the sale of your business depends on how the deal is structured.
In a share sale/share purchase, the buyer purchases the shares in your company. The consideration is paid to you as the shareholder rather than to the company. This means the main tax for you, as the seller, is Capital Gains Tax on the gain from the sale of the shares. If the relevant conditions are met, you may be able to use BADR to reduce the rate of Capital Gains Tax on qualifying gains. In the 2026/27 tax year, that rate is 18%.
In an asset sale, the buyer acquires selected assets of the business rather than the shares. Those assets, which typically include goodwill, the client bank, and the trading name, are sold by the company itself, so the consideration is paid to the company and corporation tax applies to the resulting gain. Because BADR is a personal CGT relief, it is not available at company level.
However, when selling all the assets of a company, the business owners will typically extract the remaining funds from the company. There are many ways of doing this, such as through dividends, pension contributions, or salary. However, most will want to close the company down through a solvent liquidation, such as a Members' Voluntary Liquidation (MVL). Once that is done, excess cash can be paid to shareholders as a capital distribution.
The capital distribution to shareholders may qualify for BADR at this stage, subject to the relevant conditions being met. To understand more about the differences between asset purchases and share purchases, read our guide here.
Worked example
Take a simplified example.
Assume a qualifying gain of £1,000,000, no annual exemption, and full BADR eligibility within the seller’s unused £1 million lifetime limit. On a disposal that qualifies for BADR on or after 6 April 2026, the BADR rate is 18%. That means the tax payable would be £180,000, leaving £820,000 after tax.
If the same qualifying disposal had fallen between 6 April 2025 and 5 April 2026, when the BADR rate was 14%, the tax would have been £140,000, leaving £860,000 after tax.
So on a £1,000,000 qualifying gain, the increase in BADR from 14% to 18% means an extra £40,000 of tax.
It is worth noting that each individual shareholder has a personal lifetime BADR allowance.
How to prepare to sell your financial planning business in the new tax year
The new tax year is a great opportunity to take stock of where your business stands and what a sale might realistically look like for you. If you are earlier on in the process, our guide to preparing to sell your financial advice firm covers the key steps in full, from assessing your business and understanding your metrics, through to meeting buyers and negotiating terms. It is also worth having a clear sense of how long a sale typically takes, since the timeline is often longer than sellers expect and affects how early you need to start.
For those weighing up how they would like a transaction to be structured, our guide to asset sales versus share sales covers the practical and tax implications of each route, and what tends to determine which structure suits a given business.
The future of BADR
There are no definitive announcements on further tax changes to CGT or BADR, but given the BADR was previously available at a 10% Capital Gains Tax rate on qualifying gains, and before 11 March 2020 the lifetime limit was £10 million rather than £1 million, it is not out of the realm of possibility that more changes could come into effect in the coming years.
We can never know what the future holds, but we can run scenarios to assess how your sale might be affected by further changes. When working with sellers and discussing their financial requirements for any sale, we would run a sensitivity analysis to understand the potential impact of such changes.
If you want to explore your options, Chapters Capital offers a free, confidential consultation. Get in touch to discuss what a deal could look like for your business.
Considering your next chapter?
At Chapters Capital, we specialise in financial planning and wealth management M&A.
Whether you are considering a sale, merger, or want to learn more about buyers in the space, please contact one of our professional associates today for a confidential, no-obligation consultation.
To stay updated with all the relevant news in one place, sign up for our fortnightly newsletter, The Foreword.
