The taxpayer will receive one of two letters depending on their circumstances. The first letter will be sent where HMRC’s records show that the taxpayer had already exceeded the lifetime limit before they made a claim in their tax return for 2024/25. In this case, the taxpayer is asked to amend their return and remove the claim for BADR.  

HMRC will send the second letter where it believes that the amount claimed in the 2024/25 tax return has taken the taxpayer over the lifetime limit. The taxpayer is asked to amend their return so that the total amount of BADR claimed for 2024/25 and earlier tax years is within the lifetime limit.  

If the taxpayer believes that their claim for BADR is correct and does not require amendment, they should contact HMRC using the details given in the letter. 

The taxpayer should amend their return or contact HMRC by the date given in the letter. If they fail to do this, HMRC may amend the return or open an enquiry. The letter explains that HMRC will charge interest on any tax paid late, the circumstances in which a penalty may be charged and how a penalty may be reduced. 

A copy of the letter will be sent to the taxpayer’s agent if they have one.  

What is BADR? 

BADR is a capital gains tax (CGT) relief that is available on the disposal of qualifying business assets, including shares in a company. If a successful claim is made, CGT is charged on qualifying gains at a reduced rate of 10% for 2024/25 (14% for 2025/26 and 18% for 2026/27). BADR is subject to a lifetime limit of £1m (£10m prior to 11 March 2020). 

BADR was previously called entrepreneurs’ relief. 

Further information 

• HS275 Business Asset Disposal Relief (2025) - GOV.UK
• CG64125 - Business Asset Disposal Relief: calculation of the relief - general TCGA92/S169N - HMRC internal manual - GOV.UK