Closing down & dormancy
Business Asset Disposal Relief gives a reduced capital gains tax rate on qualifying business disposals, subject to a £1m lifetime limit.
Written and reviewed by Waqas Sagar Member of ICAEW, Fellow of ACCA, Fellow of AAT, a double graduate and entrepreneur at heart, helping startups grow and serving thousands of businesses nationwide with an excellent team. Published by LimitedCompany.Accountants, 12 London Road, Morden, London SM4 5BQ. Reviewed 12 September 2026 against 2026/27 UK rates and current Companies House and HMRC guidance.
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QuickBooks PartnerCertified ProAdvisor100+ yearsCombined team experienceFully insuredUp to £2m indemnityBusiness Asset Disposal Relief reduces capital gains tax to 14% on qualifying disposals, subject to a £1m lifetime limit. You generally need 5% of ordinary shares and votes, an officer or employee role, and a trading company, for at least two years.
The conditions
What disqualifies a claim
Business Asset Disposal Relief reduces capital gains tax to 14% on qualifying disposals, subject to a £1m lifetime limit. You generally need 5% of ordinary shares and votes, an officer or employee role, and a trading company, for at least two years.
For a company disposal: at least 5% of the ordinary share capital and voting rights, entitlement to at least 5% of distributable profits and assets on a winding up, the company must be a trading company or the holding company of a trading group, and you must be an officer or employee. All conditions must be met throughout the two years to disposal.
The rate has been increasing towards the main capital gains rates, so check the rate applying to your disposal date rather than assuming the 10% figure many people remember.
Substantial non-trading activity, typically investment property or large surplus cash held for non-trading purposes, can stop a company being a trading company. Dilution below 5% without an election, and ceasing employment more than three years before disposal, also break the conditions.
For a company being wound up, the distribution must normally be made within three years of the trade ceasing. Plan the timetable before the trade stops, not afterwards.
Rates, thresholds and deadlines quoted here reflect the 2026/27 UK position and current Companies House and HMRC guidance. Check GOV.UK, or ask us, before relying on them for your own company.
Local help
We work with company directors across London and Surrey from our office at 12 London Road, Morden, London SM4 5BQ. Pick your area, or send the form below and we will call you back.
Frequently asked
No, it is a lifetime limit per person across all qualifying disposals.
Not automatically, but large balances held with no business purpose contribute to a substantial non-trading activities argument.
Through your Self Assessment return for the tax year of disposal, by the claim deadline for that year.
Keep bank statements, sales and platform reports, purchase invoices, payroll records, VAT workings, finance agreements and Companies House correspondence. We confirm the exact list at onboarding and identify gaps before a filing deadline becomes urgent.
The fee depends on transaction volume, record quality, VAT and payroll requirements, historic catch-up and the level of reporting needed. We agree a fixed scope and price before technical work starts, with published packages available on our fees page.
Yes. We request professional clearance, collect the prior records and authorities, check the next Companies House and HMRC deadlines, and give you one clear handover list. The process is normally completed remotely.
Yes. We work through secure cloud records, scheduled reviews and digital approvals, while keeping a named team available by phone, video call and email. Clients can also visit our Morden office by appointment.
We regularly work with Xero, QuickBooks, FreeAgent, Sage and connected sales or expense apps. The right setup depends on transaction volume, integrations and the reports you need, not simply the software brand.
The relevant calendar may include annual accounts, Corporation Tax payment and return dates, confirmation statements, VAT returns, payroll submissions and Self Assessment. We map the dates from your company year end and registrations.
No. This page explains general UK rules and common accounting treatment. Your facts, contracts and wider tax position must be reviewed before you rely on a conclusion.
Included approach
Check the current rules
Deadlines, thresholds and filing rules change. GOV.UK and Companies House publish the current statutory position; advice should then be applied to your company’s circumstances.
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