Does entrepreneurs' relief still exist?

Yes. It was renamed Business Asset Disposal Relief (BADR) in April 2020. The qualifying conditions are largely unchanged, but the rate has gone up (10% to 14% to 18% across 2025 and 2026) and the lifetime limit was cut from £10m to £1m back in March 2020.

Can I claim entrepreneurs' relief on a Members' Voluntary Liquidation?

Yes, subject to two conditions: you meet the standard BADR rules (5% personal company test, two-year qualifying period, employee or office holder status, trading company), and you don't fall foul of TAAR (the anti-avoidance rule that applies if you continue or start a similar trade within two years of the distribution). MVL distributions of £25,000 or less get capital treatment automatically.

What is TAAR and how does it affect serial founders?

The Targeted Anti-Avoidance Rule, introduced in 2016, prevents shareholders extracting company value at capital gains rates and then starting a similar business. If all four TAAR conditions are met (5%+ shareholding, close company, similar trade within two years, tax avoidance is a main purpose), the liquidation distribution is taxed as income (up to 39.35%) rather than as a capital gain at 18%.

How is BADR/entrepreneurs' relief different from EIS or SEIS relief?

Different schemes for different stages. SEIS and EIS give your investors tax relief when they put money into your company. BADR gives you tax relief when you sell or wind up the company at the end. The qualifying conditions and rates are completely separate, but a UK founder might encounter all three over the lifecycle of one company.

What's the maximum I can save with entrepreneurs' relief now?

With the £1m lifetime limit and the 18% rate (versus 24% standard CGT for higher-rate taxpayers), the maximum lifetime saving is roughly £60,000. That's down from a peak of around £1.8m before March 2020. The relief is still worth claiming, but it's no longer the multi-million-pound difference some older articles describe.

Investor Readiness Guide

Entrepreneurs' Relief: What It Was, What Replaced It, and How It Still Applies

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.

Updated May 2026 · 9 min read

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.

Then vs now: Entrepreneurs' Relief vs BADR

	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.

What changed and when

Five dates matter.

April 2008. Entrepreneurs' Relief introduced. Rate 10% on qualifying gains up to a £1m lifetime limit. The lifetime limit was raised several times over the next decade, peaking at £10m from April 2011.
April 2016. Targeted Anti-Avoidance Rule (TAAR) introduced to stop "phoenixing", i.e. liquidating a company to extract value at capital gains rates, then starting a new company doing essentially the same thing.
March 2020. Lifetime limit cut from £10m back to £1m. The biggest single change in the relief's history. Founders sitting on multi-million pound gains lost most of the benefit overnight.
April 2020. Renamed from Entrepreneurs' Relief to Business Asset Disposal Relief. Same scheme, new label.
April 2025 and April 2026. Rate increased in two steps: 10% to 14% in April 2025, then 14% to 18% in April 2026. The relief still exists, but the gap between BADR and standard CGT (24% for higher-rate taxpayers) is now just 6 percentage points.

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.

Entrepreneurs' relief and liquidation: the MVL route

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:

The £25,000 threshold. If the total distribution to shareholders is £25,000 or less, HMRC treats it as capital regardless of closure route. So MVL only saves money on distributions above that threshold. Below it, you can use the simpler informal strike-off process and still get capital treatment.
Licensed insolvency practitioner required. MVL has to be run by a licensed practitioner. Their fees typically start around £2,000 to £4,000 plus VAT, sometimes more for complex cases.
Timeline. Most MVLs complete in three to six months. Initial distributions can usually go out within weeks of appointment.
The current rate is 18% from April 2026. Previously, MVLs were rushed in early 2025 and early 2026 to lock in the lower 10% and 14% rates respectively. That window has now closed.

The phoenix trap: TAAR explained

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:

You owned at least 5% of the company before winding up. Same threshold as the BADR personal company test.
The company was a "close company" (broadly: controlled by five or fewer participators, or by directors who are also participators) at any point in the two years before winding up. This catches almost every founder-owned UK company.
You continue to carry on, or be involved with, the same trade or a similar trade within two years of the distribution. This is the key one and where founders trip up.
It is reasonable to assume that the main purpose, or one of the main purposes, of the winding up was income tax avoidance.

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.

Worked example: founder closing a consultancy via MVL

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.

Dividend income at additional rate: 39.35% on the £400k (above their existing dividend allowance and tax band).
Tax bill: roughly £157,400.
Take-home: £242,600.

Option B: Close via MVL, claim BADR.

Annual exempt amount: £3,000.
Capital gain (broadly £400k minus minimal basis): £397,000.
Within £1m lifetime BADR limit, so 18% applies (post-April 2026 rate).
Tax bill: £71,460.
Plus liquidator fees of around £4,000 plus VAT.
Take-home: roughly £323,740.

The BADR/MVL route saves about £81,000 versus the dividend route.

Caveats on these numbers

Stylised illustration, not advice. The maths assumes:

The founder qualifies for BADR (5% holding, 2-year period, employee or director status, trading company).
They have not used any of their £1m lifetime BADR limit on a previous disposal.
TAAR does not apply, i.e. the founder is not planning to start a similar trade within two years.
The cost basis is effectively zero. Real founders often have small allowable amounts.
The dividend comparison assumes the founder is already in the additional rate band.

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.

Common mistakes founders make

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.

What good looks like

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.

Where to go deeper

HMRC: HS275 Business Asset Disposal Relief (the official HMRC helpsheet, updated annually. Note the URL still references the old "entrepreneurs-relief" name)
HMRC: Targeted Anti-Avoidance Rule (CTM36305) (the technical detail on TAAR, the four conditions, and how HMRC interprets "same or similar trade")
GOV.UK: BADR rate changes anti-forestalling rules (how the April 2025 and April 2026 rate changes work, including the rules for contracts signed before the change but completing afterwards)

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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.

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