BADR Tax Changes April 2026: What Building Services and Healthcare Business Owners Must Know

From 6 April 2026, the tax you pay when selling your business rises significantly. Business Asset Disposal Relief - still widely known as Entrepreneurs' Relief - increases from 14% to 18% on qualifying capital gains. If you own an HVAC, plumbing, electrical, or fire safety business, or run a dental practice, care home, or veterinary clinic, this change directly affects how much you keep from a sale.

The numbers are straightforward. On a £1 million gain, you will pay £180,000 under the new rate instead of £140,000. That is £40,000 more in tax - gone, simply because the deal completed a few weeks too late.

This article sets out exactly what is changing, the tax impact at different gain levels, the anti-forestalling rules that could catch you even if you start your sale before April, the separate Inheritance Tax changes most owners do not know about, and a realistic timeline for getting a deal done.

Key Numbers at a Glance

What Is BADR and Who Qualifies

Business Asset Disposal Relief reduces the Capital Gains Tax rate on qualifying disposals of business assets. It applies to the first £1 million of lifetime qualifying gains. Above that threshold, gains are taxed at the standard CGT rate of 24%.

To qualify, you must meet several conditions for at least two years before the disposal, as set out in HMRC's Capital Gains Manual CG64000:

• You must be a sole trader or business partner disposing of all or part of the business, or a company officer or employee disposing of shares
• For share disposals, you must hold at least 5% of the ordinary share capital and voting rights
• The company must be a trading company (or holding company of a trading group) - not primarily an investment company
• You must be an officer or employee of the company

Most building services and healthcare business owners selling their company will qualify, provided the business has been genuinely trading for at least two years and the ownership structure meets the 5% threshold.

One common misconception: the £1 million limit is a lifetime allowance, not a per-transaction limit. If you claimed £600,000 of BADR on a previous disposal, you have only £400,000 remaining. There is no mechanism to reset or top up this allowance.

The Rate Changes: A Clear Timeline

The phased increase in BADR rates was announced in the Autumn Budget 2024 and legislated in the Finance Act 2025:

The saving from claiming BADR drops from 10p in the pound to just 6p from April 2026. On a £1 million qualifying gain, that means:

• Pre-April 2025: Tax of £100,000 (10% BADR rate)
• 2025/26: Tax of £140,000 (14% BADR rate)
• From April 2026: Tax of £180,000 (18% BADR rate)

The relief still has value - 18% is better than 24% - but the window for the larger saving is closing fast.

Tax Impact Calculations

The table below shows the tax payable at each gain level under the current 14% rate versus the incoming 18% rate. These figures assume the full £1 million BADR lifetime limit is available and gains above £1 million are taxed at 24%.

For gains up to the £1 million BADR limit, the extra tax is proportional - £40 per £1,000 of gain. For gains above £1 million, the additional tax is capped at £40,000 because BADR only applies to the first £1 million.

For a building services owner selling a business valued at 5-7x EBITDA with adjusted earnings of £200,000-£400,000, the typical gain falls squarely within the BADR limit. The difference between completing before and after April 2026 is real money - between £20,000 and £40,000 that stays in your pocket rather than going to HMRC.

Anti-Forestalling Rules: The Detail That Catches People

HMRC anticipated that business owners would rush to complete transactions before April 2026. To prevent abuse, they introduced anti-forestalling provisions targeting arrangements designed to accelerate disposals artificially.

What the rules say

If you entered into a contract for the disposal of your business on or after 30 October 2024 (Budget Day) but the disposal does not complete until on or after 6 April 2026, the gain may be taxed at the 18% rate rather than 14% - even though the contract was signed during the 2025/26 tax year.

The "excluded contract" exception

A contract is excluded from the anti-forestalling rules - meaning the 14% rate applies - if it is an unconditional contract, or a conditional contract where the conditions are outside the control of the parties. In practical terms, this means:

• A straightforward share purchase agreement signed and completed before April 2026 at the 14% rate is fine
• A contract signed in 2025/26 that genuinely cannot complete until after April 2026 due to regulatory approvals (CQC registration for care homes, for example) may still qualify for 14%
• A contract that is deliberately structured with conditions controlled by the seller to delay completion into the next tax year will likely be caught

What this means for you

The anti-forestalling rules do not penalise genuine commercial transactions that happen to straddle the April deadline. They target artificial arrangements. However, they do mean you cannot simply sign a contract now and schedule completion for after April 2026 hoping to claim the lower rate through some mechanism.

If you are currently in the sale process and expect completion to fall close to April 2026, get specific advice from your tax adviser on whether your contract falls within the excluded contract provisions. HMRC's guidance in CG64174 sets out the detailed conditions.

IHT Business Property Relief Changes: The Other April 2026 Shift

The BADR rate increase has dominated headlines, but there is a second significant change taking effect from April 2026 that many building services and healthcare owners have not yet considered.

What is changing

Currently, shares in qualifying trading companies receive 100% Business Property Relief (BPR) for Inheritance Tax purposes, with no upper limit. A business worth £5 million passes to the next generation with no IHT liability.

From April 2026, the government is capping the 100% BPR at £1 million per individual. The value above £1 million receives only 50% relief, meaning a 20% effective IHT rate on the excess.

In January 2026, following significant pushback from farming and business lobby groups, the government raised this cap to £2.5 million per individual. Combined with the existing nil-rate band and spousal transfers, this significantly reduces the number of business owners affected. However, for larger businesses valued above £2.5 million, the new IHT exposure is material.

The numbers

These figures assume the full BPR is available and the nil-rate band is applied elsewhere. The actual position depends on the owner's wider estate planning, but the direction is clear: holding a valuable trading business in your estate is no longer fully sheltered from IHT.

Why this matters for your exit decision

For owners who were planning to hold their business until retirement or death, relying on BPR to pass it to the next generation tax-efficiently, the calculation has shifted. Selling the business, paying CGT at 14% (or even 18%), and investing the proceeds in IHT-efficient structures may now produce a better outcome than holding and facing 20% IHT on values above the cap.

This is particularly relevant for established building services businesses with enterprise values of £3 million or more - exactly the profile that PE-backed consolidators are actively pursuing. Royal London's analysis of the BPR changes provides additional detail on the interaction between BPR, Agricultural Property Relief, and the new cap.

The Deal Timeline Reality: Why You Need to Act Now

Today is 27 March 2026. The April 2026 deadline is eleven days away. If you have not already exchanged contracts, completing a transaction at the 14% BADR rate before the deadline is, for all practical purposes, no longer possible.

But here is the critical point: the 18% rate is still significantly better than the 24% standard CGT rate. BADR still saves you £60,000 on a £1 million gain. The relief has not been abolished - it has been reduced.

Typical UK SME deal timelines

Based on current UK M&A market data, the average timeline from engaging an adviser to completion looks like this:

For building services businesses under £2 million in enterprise value, the timeline can compress to 3-4 months if the business is well-prepared and the buyer is a PE platform with a standardised acquisition process. Larger healthcare transactions involving CQC registration transfers or NHS contract novation typically take 6-12 months.

The next window: selling in 2026/27 at 18%

If you missed the 14% window, the smart move is to prepare properly for a sale in 2026/27 at 18%. Rushing a transaction to save on tax but accepting a lower sale price is almost always a worse outcome. A well-prepared business sold at 6x EBITDA versus a rushed sale at 4.5x EBITDA represents a far larger difference than the 4% tax rate change.

Business owners looking to explore their exit options with buyers already active in their sector should be thinking about preparation now - cleaning financials, reducing owner dependency, documenting processes - so the business is ready to market in Q2 or Q3 2026.

Implications for Building Services Owners

The building services sector - HVAC, plumbing, electrical, and fire safety - is experiencing one of the most active M&A markets in recent UK history. Private equity firms have been building platforms through buy-and-build strategies, acquiring local operators and consolidating them into regional or national businesses.

Current deal activity

According to Lincoln International's fire and life safety report, PE-backed consolidators completed over 230 transactions in the fire and life safety sector alone in 2023-2024. HVAC has seen similar intensity, with platforms actively acquiring businesses with recurring maintenance revenue and strong engineer teams.

What this means for your tax position

Building services businesses typically sell for 4-7x EBITDA depending on size, recurring revenue mix, and accreditation profile. For a typical business with EBITDA of £200,000-£500,000:

The tax numbers are significant, but the key driver of your net proceeds is the multiple, not the tax rate. Owners who invest 6-12 months in preparation - achieving NICEIC or BAFE accreditation, shifting from reactive work to maintenance contracts, reducing owner dependency - routinely achieve 1-2 additional turns on their multiple. On a £350,000 EBITDA business, one extra turn of multiple is worth £350,000 before tax. The 4% BADR increase costs £40,000.

Sector-specific considerations

• HVAC businesses: MCS-accredited businesses with heat pump capability command premium multiples. The government's heat pump adoption timeline creates urgency among buyers building capacity.
• Fire safety companies: The Building Safety Act 2022 continues to drive demand for accredited firms. BAFE-registered businesses with recurring inspection contracts are among the most sought-after acquisition targets in the UK.
• Electrical contractors: EV charging capability and smart building expertise are emerging value drivers. Earlier-stage consolidation means first-movers selling to PE platforms achieve better terms.
• Plumbing and heating businesses: Gas Safe registration and dual gas/renewable capability are baseline requirements. Contract-heavy businesses with housing association work attract the strongest interest.

Implications for Healthcare Owners

Healthcare businesses - dental practices, care homes, veterinary clinics, and medispas - face the same BADR changes but with additional complexity around regulatory transfers and workforce considerations.

Dental practices

The dental M&A market remains exceptionally active. DSOs (Dental Support Organisations) including Portman Dental Care, BUPA Dental Care, and Rodericks Dental continue to acquire practices across the UK. NHS contract practices with UDA values above the national average and strong associate retention are commanding multiples of 6-10x EBITDA.

For dental practice owners considering a sale, the BADR change adds urgency to an already time-sensitive market. NHS contract reform discussions add uncertainty - selling while contract values are established may be preferable to waiting for a new funding model.

Care homes

Care home transactions involve CQC registration transfers that can add 8-12 weeks to the deal timeline. Owners planning to sell need to factor this regulatory step into their timeline planning. The sector also faces the IHT BPR change more acutely, as many care home businesses are held in family structures where succession planning relied on full BPR.

Care homes with "Good" or "Outstanding" CQC ratings and occupancy above 90% remain highly attractive to buyers, with multiples of 7-12x EBITDA depending on size, location, and registration category.

Veterinary practices

PE-backed consolidators including CVS Group, IVC Evidensia, and Linnaeus (owned by Mars) have transformed the veterinary sector. Independent practice owners considering a sale should note that while multiples remain strong (6-10x for well-run practices), the most aggressive acquisition phase may be nearing maturity. Selling while buyer competition is high maximises value.

Medispa and aesthetics clinics

The medispa and aesthetics sector is earlier in its consolidation cycle. Businesses with strong recurring revenue from treatment plans, established brand reputation, and qualified practitioner teams are attracting interest from both PE platforms and strategic buyers. Read our guide to medispa clinic valuations for current multiple ranges and buyer expectations.

What to Do Next: A Practical Checklist

Whether you are planning to sell in the next 6 months or the next 2-3 years, the BADR and IHT changes mean you should take these steps now:

Immediate actions (this month)

• Get a professional valuation: Understand what your business is worth and what gain you are likely to realise. This determines the actual tax impact on your specific position.
• Review your BADR lifetime balance: If you have made previous qualifying disposals, check how much of your £1 million allowance remains. Your accountant or tax adviser can confirm this from prior tax returns.
• Check qualifying conditions: Ensure you have held the required 5% shareholding and been an officer or employee for at least two years. If your ownership structure is complex (trusts, multiple classes of shares), get specialist advice now.

Medium-term actions (next 3-6 months)

• Prepare your business for sale: Clean up financials, reduce personal expenses running through the company, document key processes, and ensure management can operate without you.
• Engage an M&A adviser: If you are seriously considering a sale in 2026/27, starting the preparation process now gives you the best chance of achieving a premium multiple. Contact DealFlowAgent to discuss your specific situation and get a confidential assessment of buyer interest in your sector.
• Review IHT estate planning: If your business is worth more than £2.5 million, discuss the BPR cap with your financial adviser. The interaction between CGT on a lifetime sale and IHT on death needs professional modelling.

Longer-term planning (6-24 months)

• Consider earn-out structures: If your gain exceeds the £1 million BADR limit, structuring part of the consideration as an earn-out (where payment is contingent on future performance) may spread the gain across tax years. This is specialist territory - get advice before assuming it works.
• Monitor further policy changes: The current government has signalled a direction of travel toward aligning CGT with income tax rates. While no further changes have been announced, building services and healthcare owners should factor political risk into their exit timing decisions.

Frequently Asked Questions

What is BADR and how does it differ from Entrepreneurs' Relief?

They are the same thing. Entrepreneurs' Relief was renamed to Business Asset Disposal Relief in April 2020. The qualifying conditions and lifetime limit remained unchanged at that point. The relief reduces CGT on qualifying business disposals to a rate below the standard 24%.

Can I still claim BADR after April 2026?

Yes. BADR has not been abolished. The rate increases from 14% to 18%, but you still save 6p per £1 of qualifying gain compared to the standard 24% rate. On a £1 million gain, BADR saves you £60,000 even at the new rate.

What happens if my deal completes after 6 April 2026?

Your qualifying gains will be taxed at 18% instead of 14%. The anti-forestalling rules may also apply if the contract was structured to try to access the lower rate. Genuine commercial transactions that simply take longer than expected are not targeted by the anti-forestalling provisions, but you should discuss your specific timeline with your tax adviser.

Do the anti-forestalling rules affect all transactions?

No. The rules specifically target contracts entered into on or after 30 October 2024 that are designed to bring forward a disposal into the 2025/26 tax year. Contracts that are unconditional, or conditional on matters outside the parties' control, are excluded. Normal commercial transactions are not affected. Cowgills provides a clear summary of the anti-forestalling provisions.

How does the £1 million lifetime limit work?

The £1 million limit applies to the total qualifying gains you claim BADR on across your entire lifetime, not per transaction. If you sell one business and claim BADR on a £600,000 gain, then sell another business later, you can only claim BADR on the first £400,000 of that second gain. Once you have used all £1 million, any further business disposals are taxed at the standard 24% rate.

What about joint ownership with my spouse?

Each individual has their own £1 million BADR lifetime limit. If you and your spouse each own 50% of the company and both qualify, you can collectively claim BADR on up to £2 million of gains. This is a key planning point that many business owners overlook.

How does the IHT BPR cap affect me if I am selling rather than keeping the business?

If you sell, BPR is irrelevant because you no longer hold qualifying business assets. The proceeds from a sale would form part of your estate for IHT purposes, but there are other reliefs and planning strategies (pension contributions, trusts, gifting, AIM portfolio investments) that can mitigate IHT exposure. The BPR change is primarily relevant if you are choosing between selling now and holding the business longer.

What EBITDA multiples are building services businesses achieving in 2026?

Current ranges vary by sub-sector and business quality. HVAC and fire safety businesses with strong recurring revenue are achieving 5-8x EBITDA. Plumbing and electrical businesses typically trade at 4-6x. These multiples apply to businesses with EBITDA above £200,000 - smaller businesses are usually valued on a different basis. Our guide to selling a landscaping business covers how multiples work in practice.

Should I rush my sale to save on the BADR rate increase?

Almost certainly not. The 4% rate increase on a £1 million gain costs £40,000. Accepting a lower sale price by rushing the process will cost far more. A business sold at 5x EBITDA instead of 6x EBITDA because it was not properly prepared loses an entire year of earnings - typically £200,000-£500,000 for the businesses in question. Prepare properly, achieve the best multiple, and treat the tax rate as one factor among many.

Do I need specialist M&A advice or just my accountant?

Both. Your accountant handles the tax compliance and planning. An M&A adviser manages the sale process - identifying buyers, running competitive tension, negotiating deal terms, and managing due diligence. The two roles are distinct and complementary. Speak to DealFlowAgent about how we work alongside your existing professional advisers to maximise your outcome.

Take the First Step

The BADR rate is increasing and the IHT landscape is shifting. These are facts, not projections. But the building services and healthcare M&A market remains strong, buyer competition is intense, and well-prepared businesses are achieving exceptional multiples.

The owners who achieve the best outcomes are the ones who plan early, prepare thoroughly, and enter the market with confidence. Whether you are 6 months or 2 years from a sale, the preparation you do today determines the price you achieve tomorrow.

Get in touch with DealFlowAgent for a confidential, no-obligation conversation about your business, the current buyer landscape in your sector, and what your exit could look like. We work with building services and healthcare owners across the UK, connecting them with the right acquirers at the right time.

This article is for general information purposes only and does not constitute tax, financial, or legal advice. Tax rules are complex and depend on individual circumstances. Always consult a qualified accountant or tax adviser before making decisions about the sale of your business. The tax rates and thresholds described are based on legislation enacted at March 2026 and may be subject to future change.

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