Keep Business Asset Disposal Relief when your business sits under a holding company.

Yes, if the conditions are met throughout the two years before the sale. The holding company must be the holding company of a trading group, it must be your personal company, which broadly means you hold at least 5% of the shares and votes plus a 5% economic interest, and you must be an officer or employee of the holding company or another group company. BADR is not lost just because there is a holding company above the trade.

For disposals from 6 April 2026, Business Asset Disposal Relief taxes qualifying gains at 18%. The rate was 10% before 6 April 2025 and 14% for 2025/26. Gains above the £1m lifetime limit, or that do not qualify, are taxed at the normal capital gains tax rates of 18% within the basic rate band and 24% above it. The annual exempt amount is £3,000.

At most £60,000 per person in 2026/27. BADR taxes up to £1m of lifetime gains at 18% instead of the 24% higher rate, a difference of 6% on £1m. That is less than it used to be, but still worth protecting, and a couple who each qualify can save up to £120,000 between them. Where a seller's gains would fall in the basic rate band anyway, the saving is smaller.

A holding company is a company with one or more 51% subsidiaries. The group is a trading group if the activities of the holding company and its 51% subsidiaries, taken together as one business, do not include non-trading activities to a substantial extent. Activities between group companies are disregarded. So the test looks at the whole group, not at the holding company on its own, which itself usually does little more than hold shares.

Not necessarily. If the property subsidiary only lets premises to the group's own trading companies, that letting is an intra-group activity and is disregarded in the trading group test. Property let to outside tenants is an investment activity and counts as non-trading. If it is substantial, broadly more than 20% on HMRC's indicators such as income, assets and time spent, BADR on the holding company shares can be lost for the whole gain.

There is no fixed figure. HMRC treats more than 20% as substantial and weighs indicators such as non-trading income, the asset base, expenses and staff time, and history. Cash that the trade needs, or that is earmarked for a genuine trade purpose, normally counts as trading. HMRC's guidance says long-term retention of significant trading profits may amount to an investment activity, so years of surplus cash need reviewing well before a sale.

No, not on its own. For a holding company, BADR looks at the activities of the whole group taken together, so cash moved from a trading subsidiary up to the holding company is still inside the group and still counts in the test. Moving the cash up can protect it from the trading company's creditors and help with the substantial shareholding exemption, but for BADR the question is what the group as a whole is doing.

Generally yes. After a share-for-share exchange, your holding company shares are treated as the same asset as your original trading company shares. HMRC's guidance at CG63975 looks through the exchange, so the time you held the trading company counts towards the two years. But from the date of the exchange, the conditions must be met in relation to the holding company, including the 5% tests and being an officer or employee.

Not necessarily a director, but you must be an officer or employee. For a holding company, being an officer or employee of the holding company itself or of a company in its trading group is enough. So a shareholder employed by the trading subsidiary can qualify on a sale of the holding company shares. A shareholder who has no role anywhere in the group for the two years before the sale cannot.

You must hold at least 5% of the holding company's ordinary share capital and at least 5% of the voting rights. You must also have either at least 5% of the profits available for distribution and of the assets on a winding up, or at least 5% of the proceeds if the whole ordinary share capital were sold. All of this is tested on the holding company after the exchange, throughout the two years.

Not on their own. The personal company test needs at least 5% of the voting rights as well as 5% of the ordinary share capital, so a family member who holds only non-voting shares will usually fail it, however valuable the shares. When a holding company is inserted, it is a good moment to check that each shareholder who expects BADR will hold voting shares and meet all the 5% tests.

It is an election that switches off the normal no-disposal treatment on a share-for-share exchange. Instead, you are treated as selling your original shares at the time of the exchange, and you can claim Business Asset Disposal Relief on that gain then. The election covers all the shares in the exchange. It is useful where the new holding company shares may not qualify for BADR later, but it means paying tax without receiving cash.

Mainly when you expect to lose BADR after the exchange. Examples include a holding company that will build up large investments, which could fail the trading group test, or where your stake in the holding company will fall below 5% or you will step away from any role. The election locks in BADR at the time of the exchange. The deadline is the first anniversary of 31 January after the tax year of the exchange.

By the first anniversary of 31 January following the end of the tax year of the sale. For a sale in 2026/27, that is 31 January 2029. The claim is usually made in your self assessment return. Because BADR depends on facts throughout the previous two years, it helps to have the evidence ready before the sale, including shareholdings, roles and the group's trading status.

BADR can still be available if you dispose of the shares within three years of the company ceasing to be the holding company of a trading group, and the conditions were met throughout the two years up to that point. This matters where the holding company sells its last trading subsidiary and is then wound up. If more than three years pass, or the conditions failed earlier, the relief is lost.

Yes, but only in their own right. Each spouse or civil partner must meet the conditions personally for the two years before the sale: hold at least 5% of the shares, votes and economic interest, and be an officer or employee of the holding company or a group company. If they qualify, each has their own £1m lifetime limit, which can double the relief available to a couple.

It can. Shares, funds, let property or large cash deposits held by the holding company or any company in the group are non-trading activities. If they are substantial in the context of the whole group, measured against HMRC's 20% indicator using income, assets, costs and time, the holding company stops being the holding company of a trading group and BADR is lost on the whole gain, not just part of it.

Start at least two years ahead if you can. Check that every seller holds 5% of the shares, votes and economic rights, and has a role in the group. Review cash and investments against the trading group test. Consider moving let property or investments out of the group, with the tax cost of doing so checked first. Keep board minutes explaining what cash is for. Close or tidy dormant or non-trading companies.

The £1m is a lifetime limit, so gains on earlier qualifying disposals, including those made under the old Entrepreneurs' Relief name, count towards it. If you have already claimed relief on, say, £600,000 of gains, only £400,000 remains for a later sale. The rest is taxed at normal capital gains tax rates. It is worth checking past claims before modelling the tax on a holding company sale.