Changes to Business Asset Disposal Relief (BADR) and Capital Gains Tax (CGT) rates from April 2026 are having a noticeable impact on company owners’ exit planning, leading to a rise in Members’ Voluntary Liquidation (MVL) enquiries at BRI Business Recovery and Insolvency and subsequently formal appointments.
If you are considering closing your company and want to discuss the option of an MVL, please contact our team today.
About Business Asset Disposal Relief (BADR)
Business Asset Disposal Relief (BADR) is a UK tax relief that reduces the rate of Capital Gains Tax to 14% on qualifying business asset disposals, up to a lifetime limit. Currently, BADR allows qualifying shareholders to extract profits on the liquidation of a solvent company at a reduced tax rate. However, this relief is becoming progressively less generous. From 6 April 2026, the BADR rate will increase from 14% to 18%, and reduce the overall tax efficiency of returns to shareholders via a liquidation.
About Capital Gains Tax
In addition, for those who don’t qualify for BADR, rates of CGT have already increased from 20% to 24%. Capital Gains Tax (CGT) is a UK tax charged on the profit made when you sell or dispose of an asset that has increased in value, such as property, shares or business assets. The amount paid depends on a number of factors, and you should review your position with your tax advisor. However, despite this increase, owners of companies with significant retained profits could still be substantially better off in exiting via an MVL process when compared with the alternative of extracting funds via salary / dividends.
Increased MVL Enquiries Based on BADR and CGT Alterations
As a result of the changes in BADR, many directors are now accelerating their exit plans and speaking to BRI Business Recovery and Insolvency to take advantage of the more favourable tax treatment while it remains available. This has led to increased demand for professional advice, with more enquiries progressing into formal appointments.
However, we must advise that to assess eligibility, timing and compliance, you will need to speak with your tax advisor as we are unable to provide tax advice. If that advice is that you should speak to an insolvency practitioner about your company and an MVL, BRI Business Recovery and Insolvency are here to help and have a simple guide to MVLs to cut through the jargon for you.
If you are considering closing a solvent company via an MVL, early planning is essential. We strongly recommend contacting BRI Business Recovery and Insolvency sooner rather than later to explore your options and ensure any liquidation is structured efficiently, compliantly and at the most advantageous time. Please find out more at www.briuk.co.uk, email info@briuk.co.uk or telephone 02476 226839.