For two years, tax articles aimed at business owners were countdown pieces: sell before the Business Asset Disposal Relief rate goes up. That countdown is over. The rise happened on 6 April 2026, the panic framing has expired, and what is left is a calmer and more useful question: what does the new landscape actually mean for an HVAC owner planning an exit in the next few years?
Two changes matter, one well known and one much less discussed. This post covers both. It expands on the third force in our Autumn 2026 market briefing, and none of it is tax advice; your accountant should run your specific numbers.
BADR: Where Things Now Stand
Business Asset Disposal Relief reduces the capital gains tax rate on qualifying business sales. The staircase announced in the October 2024 Budget is now complete: 10 per cent before April 2025, 14 per cent for the 2025-26 tax year, and 18 per cent from 6 April 2026. The relief covers the first £1 million of qualifying lifetime gains; above that, the main 24 per cent rate applies.
The qualifying conditions are unchanged. You need at least 5 per cent of the shares and voting rights, a role as director or employee, a trading company, and all conditions met for the two years before disposal. One detail that catches people out: it is the completion date of your sale that fixes the rate, not the date terms were agreed, and anti-forestalling rules block attempts to lock in an old rate by exchanging contracts early.
Is 18 Per Cent Still Worth Having?
Yes, and it is worth stating plainly. On a full £1 million qualifying gain, BADR at 18 per cent saves up to £60,000 against the main rate. The gap between the relief rate and the main rate is the narrowest it has ever been, at six percentage points, but it remains real money.
The more strategic point is directional. Since 2024 the relief has moved only one way, and each Budget is a fresh opportunity for the gap to narrow further or for the £1 million lifetime limit to be revisited. We would not suggest anyone sells a good business purely because a relief might shrink. We would suggest that owners who are already two or three years from a planned exit stop assuming the tax environment will wait for them.
The Change Fewer People Are Talking About
From April 2026, 100 per cent Business Property Relief from inheritance tax is capped at £2.5 million of combined business and agricultural assets. Above the cap, relief falls to 50 per cent, which produces an effective inheritance tax rate of 20 per cent on the excess. The cap was originally announced at £1 million and raised to £2.5 million in December 2025. It is transferable between spouses and civil partners, so a couple can pass on up to £5 million of qualifying assets before the charge bites.
For decades, one entirely rational succession plan was to hold the business until death and pass it on free of inheritance tax. For estates below £2.5 million that logic still holds. For owners whose business is worth more, holding forever now carries a price, and that changes the arithmetic between holding, gifting during lifetime, and selling. A £4 million business passed on at death now faces an effective 20 per cent charge on £1.5 million of value that would previously have been fully relieved.
What This Means in Practice
Three suggestions, all of them boring and all of them valuable. First, know your numbers: get a current, realistic valuation of the business, because every piece of tax planning starts from that figure. Second, have the BADR eligibility conversation with your accountant now, while there is time to fix any structural issues inside the two-year qualifying window. Third, if your business is likely to be a large part of your estate, ask specifically about the Business Property Relief cap; it is new enough that it is not yet part of many owners' standing plans.
Tax should never drive the decision to sell. It should inform the timing and the structure of a decision you make for your own reasons. The owners who do best are the ones who understand their position before a buyer is at the table, not after.
