The New Rate Is Live: What April Changed for Electrical Owners

The rate that applies from today, in cash

Business Asset Disposal Relief, the relief for owners selling a business they work in, has taxed the gain at 18% since Apr 2026, on qualifying gains up to a £1m lifetime limit. Until April 2026 it was 14%, and the step was announced at the Autumn Budget in October 2024, so nothing about it is a surprise and nothing about it is negotiable. The main rate of Capital Gains Tax, the tax on the gain from a sale, remains 24% for higher rate taxpayers.

In cash, on a full £1m of qualifying gains, the relief is now worth up to £60,000 against the main rate. That is a real number and it is smaller than the number most owners were told to worry about, because the comparison that generates the headline is the step itself rather than the relief that remains. Both figures are true and they are answers to different questions.

The date the sale contract is made still governs, not the completion date, which matters for anybody mid-process. A deal whose price was agreed in February but whose contract is made in May is taxed at today's rate, not at the one that applied when the price was agreed, and a conditional contract counts from the day its conditions are met. If that changes the arithmetic of a transaction you are already in, raise it with your own tax adviser now rather than at completion. It is also a reminder that the qualifying conditions run on their own clock: two years of holding the shares and of the officer or employee relationship, tested at the date of disposal.

The inheritance tax change that arrived alongside it

From this month, 100% agricultural and business property relief is capped at the first £2.5m of combined qualifying assets, with 50% relief above that, which is an effective inheritance tax rate of 20% on the excess. The cap was announced at £1m and raised to £2.5m in December 2025, so a good deal of the commentary written before Christmas still refers to the lower figure.

The allowance is transferable between spouses and civil partners, which takes a couple to £5m of qualifying assets at full relief. The government expects up to 1,100 estates to pay more inheritance tax in 2026-27 as a result. That is a small number nationally and it includes a recognisable type of business: the owner-managed contractor worth several million that was always going to pass to the next generation rather than be sold.

For an electrical business owner the practical effect is that passing the business on at death is no longer the automatically efficient route it was widely assumed to be. That is a matter for your own tax adviser and your own circumstances, and it belongs in the conversation about whether to sell, pass on or carry on, rather than being left out of it because nobody raised it.

Why this changes preparation more than it changes timing

The rate is now fixed and applies to everybody equally, which removes the one variable owners have spent eighteen months trying to time. What is left is the part that was always doing the heavy lifting: the proportion of your revenue that recurs, the state of your records, the depth and grading of your team, and how much of it still depends on you being there.

Those things move a valuation by a multiple of anything a four point rate change does. A business that sells for half a turn of EBITDA more, meaning half a year's profit before interest, tax, and the write-down of equipment, vehicles and other assets added to the price, because its testing book is documented and its team is retained has gained considerably more than the tax step took, and unlike the rate, it is entirely within your control. Half a turn on a business earning four hundred thousand is two hundred thousand pounds, which puts the rate change into proportion. That is not a consolation. It is the correct order of priorities, and it was the correct order before April as well.

The rate is the same for everybody now. What is left is the part that was always doing the heavy lifting.

Tax treatment depends on your own circumstances, so take advice from your own accountant or tax adviser; we set out which professionals you will need, and when.