Business Asset Disposal Relief reduces the higher rate of 20% Capital Gains Tax (CGT) liability on the closure of your company to 10% on qualifying gains. A lifetime limit of £1 million is in place for BADR.
Claiming offers you a significant saving as your tax liability is effectively halved if you’re a higher-rate taxpayer, and it allows you to extract the maximum value from your solvent company.
To be able to claim you must have traded for at least two years and dispose of your business assets within three years. There’s also a restriction on carrying out a similar trade or activity during the three years following closure. This is to minimise the likelihood of MVL being used as a tax avoidance route.