Can landlords claim Business Asset Disposal Relief?
Business Asset Disposal Relief (BADR) taxes qualifying business gains at a lower CGT rate: 14% in 2025 to 2026 and 18% from 6 April 2026, up to a £1 million lifetime limit. Ordinary residential letting is an investment, not a trading business, so most landlords cannot claim it. Former furnished holiday let owners may still qualify for a limited time.
Read more in our guide: Capital Gains Tax when selling rental property
BADR at a glance
| Point | Position |
|---|---|
| Rate | 10% to 5 Apr 2025, 14% in 2025-26, 18% from 6 Apr 2026 |
| Lifetime limit | £1 million of gains |
| Ordinary buy-to-let | Not eligible: letting is an investment activity |
| Former holiday lets | Possible if the business ceased before 6 Apr 2025 and the sale is within 3 years |
| Company shares | Trading companies only; property investment companies do not qualify |
| Holding period | Usually 2 years |
What the relief does
BADR, once called entrepreneurs' relief, reduces the Capital Gains Tax rate on gains from selling all or part of a trading business, or shares in a trading company. The rate rose from 10% to 14% in April 2025 and to 18% in April 2026, so the saving against the 24% top residential rate is now smaller, but it still matters on large gains.
Why most landlords cannot claim
Tax law treats letting residential property as an investment, however hands-on the landlord. That is true even for large portfolios run full time. Selling a buy-to-let, or shares in a property investment company, does not qualify. A development or property trading business that buys to sell may be different, but its profits are taxed as trading income rather than gains.
Former furnished holiday lets
Until April 2025, qualifying furnished holiday lets were treated as a trade, so BADR was available. The regime was abolished from 6 April 2025. If an FHL business ceased before that date, BADR can still apply to a sale within 3 years of the cessation. Anti-forestalling rules stop arrangements made from 6 March 2024 to secure the old treatment.
Planning points
- Check the dates: when the business ceased and when the sale completes.
- Joint owners each have their own £1 million limit.
- BADR gains use up the basic rate band first, which can push other gains into the higher rate.
- The relief must be claimed, usually by the first anniversary of 31 January after the tax year of the sale.
Official Sources and Further Reading
General information for landlords in England, checked against official sources in October 2026. It is not tax, legal or financial advice: speak to a qualified accountant or solicitor about your own circumstances.
Frequently Asked Questions
Business Asset Disposal Relief (BADR) taxes qualifying business gains at a lower CGT rate: 14% in 2025 to 2026 and 18% from 6 April 2026, up to a £1 million lifetime limit. Ordinary residential letting is an investment, not a trading business, so most landlords cannot claim it. Former furnished holiday let owners may still qualify for a limited time.
No. HMOs are still letting, which is an investment activity, even when services are provided.
Only rarely, where the services are so extensive that it is genuinely a hotel-type trade. Take advice before relying on it.
No. Incorporation relief defers a gain when a business moves into a company. BADR lowers the rate when a business is sold.
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