The relief is still real. The name and the numbers have changed. Here's the current state for UK founders, including the liquidation route most guides skip.
Who should read this: UK founders who searched for "entrepreneurs' relief" and want to know if it still exists, anyone planning a Members' Voluntary Liquidation to close down a solvent company, and serial founders thinking about the next venture after winding up the last one.
If you searched for entrepreneurs' relief, the short answer is: yes, it still exists, but it was renamed in April 2020 and now goes by Business Asset Disposal Relief (BADR). The qualifying conditions are largely the same. The rate and the lifetime limit have both moved, in some cases dramatically.
This guide covers what entrepreneurs' relief was, what it became, what changed, and the two scenarios where the old name still matters most: founders winding up a solvent company through Members' Voluntary Liquidation, and serial founders who need to know about the phoenix trap that can wipe out the relief entirely.
If you want the forward-looking founder version focused on planning an exit, see our companion Business Asset Disposal Relief guide. If you're here because you've heard the old name, keep reading.
| Entrepreneurs' Relief (2008 to 2020) | BADR (current, from 6 April 2026) | |
|---|---|---|
| Rate on qualifying gains | 10% (2008 to 5 April 2025) | 18% |
| Lifetime limit | £10m (cut to £1m in March 2020) | £1m |
| Maximum lifetime saving | Around £1.8m at peak (£10m at 18% saved vs 10%) | Around £60k for a higher-rate taxpayer (6 percentage points off £1m) |
| Qualifying conditions | 5% personal company test, 2-year period, employee or office holder, trading company | Unchanged from Entrepreneurs' Relief |
| Applies to capital distributions on liquidation | Yes | Yes (subject to TAAR, see below) |
| Anti-avoidance rule (TAAR) for phoenix companies | Introduced April 2016 | Still applies |
The qualifying conditions are the bit that hasn't really changed. The 5% personal company test, the two-year qualifying period, the requirement to be an employee or office holder, and the trading company test all still apply. A founder who would have qualified for Entrepreneurs' Relief in 2019 will qualify for BADR in 2026, but they'll keep less of their gain.
Five dates matter.
If you read older accountancy advice quoting £10m at 10%, that advice is from before March 2020 and is wrong for any disposal happening today.
This is where the old name still gets used a lot. Members' Voluntary Liquidation (MVL) is the formal process for closing a solvent UK limited company and distributing its remaining assets to shareholders. The distribution is treated as a capital disposal, which means it falls under Capital Gains Tax rules, which means it can qualify for BADR (the relief still commonly called "entrepreneurs' relief" in liquidation contexts).
This matters because closing a company by paying out as dividends is taxed as income (up to 39.35% from April 2022). Closing through MVL and qualifying for BADR is taxed at 18% from April 2026. On a £500k surplus, that's roughly £107k of difference for a higher-rate taxpayer.
A few practical notes:
This is where serial founders get caught. The Targeted Anti-Avoidance Rule (TAAR) was introduced in April 2016 to stop people closing one company down at capital gains rates, banking the BADR-saved tax, and then starting a new company doing essentially the same trade. If TAAR applies, the distribution from the liquidation gets taxed as income at up to 39.35%, not as a capital gain at 18%.
TAAR applies if all four of these are true:
The third condition is where it gets practical. "Same or similar trade" is interpreted broadly by HMRC. A consultant who closes their company, takes a six-month break, and then starts a new consultancy doing the same kind of work is very likely to fail TAAR. A founder who closes a SaaS company, takes 18 months out, and starts a property investment business is probably fine.
If you're closing a company and even thinking about starting something similar within 24 months, get specialist tax advice before the liquidation completes. A failed TAAR claim turns a 18% tax bill into a 39.35% tax bill.
A founder owns 100% of a UK trading consultancy. They've been running it for six years and have built up £400,000 of retained profits in the company. They want to close the company down and either retire or take a long break before deciding what's next.
Their options:
Option A: Pay out as dividends, then close.
Option B: Close via MVL, claim BADR.
The BADR/MVL route saves about £81,000 versus the dividend route.
Stylised illustration, not advice. The maths assumes:
If TAAR applies, the BADR option collapses to roughly the dividend treatment, and the £81,000 saving disappears. This is why the TAAR question matters so much.
Always model your specific scenario with an accountant and an insolvency practitioner before committing.
Assuming the relief is gone. It's not. It was renamed, the rate is higher, and the lifetime limit is much lower than 2018, but the relief still exists and is still worth claiming if you qualify.
Using outdated guidance. Articles written before March 2020 quote the £10m lifetime limit. Articles written before April 2025 quote the 10% rate. Always check the publication date.
Closing a company without checking TAAR. Serial founders especially. Get specialist advice before liquidating if there's any chance you'll start something similar.
Mixing up MVL and CVL. Members' Voluntary Liquidation is for solvent companies (the route that qualifies for BADR). Creditors' Voluntary Liquidation is for insolvent companies (different process, different tax treatment).
Choosing MVL when strike-off would do. Below the £25,000 distribution threshold, an informal strike-off is cheaper and gets the same capital treatment. MVL fees start at a few thousand pounds, so it's only worth it for larger surpluses.
Forgetting the claim deadline. The BADR claim has to be made in writing to HMRC by 31 January, two years after the end of the tax year of disposal. Diary it the day the disposal completes.
A founder who knows entrepreneurs' relief was renamed, models BADR at the current 18% rate against their actual income position, plans the MVL with a licensed insolvency practitioner well in advance, has explicitly checked TAAR before agreeing the liquidation, and engages a tax adviser at the start of the process rather than after the practitioner is already appointed.
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This is general information, not financial, tax, or legal advice. Capital Gains Tax, BADR, and the Targeted Anti-Avoidance Rule are all areas where rules have changed several times in recent years and the technical detail matters. The numbers and rates above are correct as of May 2026 but always check the latest HMRC guidance and seek specialist advice before making decisions about disposals, liquidations, or new ventures after a winding up.