The April 2027 BADR Deadline, From the Buyer's Side

The Budget on 28 October cut the tax relief most owner-managers rely on when they sell. From 6 April 2027, the lifetime limit on Business Asset Disposal Relief (BADR) falls from £1 million of gains to £500,000 (HMRC policy paper).

Since the Budget, accountants and solicitors have been telling sellers the clock is ticking. From the buyer's chair the questions are different: what the change costs an owner, which owners it touches, and how you should respond.

General information, not tax advice. The seller's tax position is for the seller and their adviser, and yours is for yours.

What changed, in numbers

BADR lets an owner pay Capital Gains Tax at 18% on qualifying gains. Without it, a higher-rate taxpayer pays 24% (gov.uk, rates for 2026-27 and 2027-28). The relief is worth six pence in every pound of gain, up to the lifetime limit.

Halving the limit moves £500,000 of gain from 18% to 24%. The most it can cost any one person is £30,000. Each shareholder has their own limit, so a married couple who each hold shares could lose up to £60,000 in total.

HMRC expects about 51,000 people to claim BADR. It estimates around 13,000 will be affected; the other three-quarters have gains small enough that the new limit still covers them. Of those affected, 81% are aged between 45 and 74, against 42% of the adult population. If you've read our succession risk guide, you'll recognise that age band.

£30,000 matters to anyone. It's also a small slice of a sale that produces a gain above £500,000. It's likely to tip owners who were already close to selling. It won't persuade an owner who had no plans to go.

The deadline is completion, not a handshake

An owner can't lock in the old limit by exchanging contracts in March and completing in the summer. Under normal rules, an unconditional contract counts as the sale date even if completion comes later. The Budget closes that route: a contract exchanged before 6 April 2027 that completes afterwards gets the £500,000 limit, unless the parties can show they didn't time it that way for the tax. Where buyer and seller are connected, the contract has to be for wholly commercial reasons.

In practice, an owner who wants the old limit needs to complete before 6 April 2027. A straightforward small deal commonly takes three to six months from agreed heads of terms to completion, and our step-by-step guide to buying a UK business shows where that time goes. Count back from April and an owner who cares about this needs terms agreed by around December or January. A letter that lands in November reaches them with time to act. One that lands in March doesn't.

Which owners it applies to

Four conditions narrow the field, and you can check most of them from public data before you write a letter.

The company has to be a trading business. BADR doesn't cover companies whose main activity is investment (gov.uk, BADR conditions). Property letting is the obvious example. In our June 2026 run on property companies around Newark, 26 companies had a sole director aged 60 or over. Fifteen of those listed letting their own property as their main activity, and another listed housing association letting. The BADR deadline is unlikely to apply to those owners, whatever their age. SIC codes are self-reported, so treat this as a first sort and expect your adviser's view to differ on edge cases.

The owner has held at least 5% and worked in the business for two years. Most owner-managers meet it. The People with Significant Control register shows anyone holding more than 25%, and the officer list shows who sits on the board.

The gain is above £500,000. The limit applies to the gain, and a founder who paid £100 for their shares will have a gain close to their share of the sale price. A sole owner selling for more than about half a million is in scope. A business owned 50:50 by a couple needs to sell for roughly twice that before either of them is affected.

They haven't used the limit already. Earlier claims count against it. An owner who sold a previous business with BADR may have little or none of the new £500,000 left.

What to do as a buyer

Expect owners to have heard about it. Their accountant will mention it, and so will other buyers. At least one UK acquisition training firm gives its members template letters tied to the Budget, so owners in your patch may get several this winter. A letter that only says "beat the deadline" will read like all the others.

Mention it in a sentence, if it's relevant. Say you've seen the changes to BADR, you're in a position to move in the next few months, and their adviser can tell them whether it affects them. Don't put a number on their tax bill. You don't know their gain, their past claims or their other income, and guessing wrong costs you credibility.

Be ready to move. An owner working to a deadline values certainty more than an extra few per cent on the price. That means funding you can evidence, a solicitor and an accountant already instructed, and a due diligence plan you can start the week heads are signed. A buyer who can complete in four months can win against one who offers more and needs six.

Use deferred payments. A fixed deferred payment counts as part of the sale price at the date of the sale (HMRC Capital Gains Manual CG14881). A deal that completes before 6 April can still pay the seller over two or three years, and the gain falls under the old limit. The catch for the seller is paying tax on money they haven't received yet, which their adviser will want to plan for. Earn-outs follow different rules, so take advice before you rely on one in a pre-April deal. The funding and structure guide covers how these payments work.

Don't let their deadline become your shortcut. Due diligence finds things, and a seller in a hurry has every reason to explain them away. Test the deal on the assumption that it completes in May: if the price and structure still work for you, a pre-April completion is a bonus for the seller. Agree in the heads of terms what happens if the date slips, so neither side is negotiating under a countdown in March.

The cost side of the Budget

Two smaller changes belong in your numbers. The National Living Wage rises 3.9% to £13.21 an hour from 1 April 2027 (Budget 2026). For a target with a large hourly-paid workforce, rebuild the wage line before you agree a price based on last year's accounts. Retail, hospitality and leisure businesses in England get business rates freezes and cuts, which helps targets in those sectors.

The Budget also announced a new 10% Founders' Relief from April 2027. It's aimed at fast-growing companies with turnover of at least £10 million, and very few owner-managed businesses in the £500,000 to £5 million range will qualify. We'll cover it in a separate post.

Where this leaves you

Between now and April, a slice of the owners you'd want to buy from have a reason to talk sooner than they planned. For most of them it's a nudge worth up to £30,000. Your edge comes from knowing which owners it applies to before you write, and being able to complete when they're ready.

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