Business Asset Disposal Relief can still apply after a business stops trading, but only within a fixed window. A sole trader or partner can claim on assets that were in use in the business when it ceased if the business was owned for two years up to cessation and each asset is sold within three years of that date. A shareholder has the same three years from the date the company stopped being a trading company. HMRC has no power to extend the period, and later sales are taxed at the main capital gains tax rates.

Why is selling assets after closing treated differently?

Section 169I(2) TCGA 1992 lists three kinds of disposal that can qualify: the whole or part of a business, assets in use for a business at the time it ceases, and shares or securities. Selling a business as a going concern falls in the first. If you close down and then sell off the premises, equipment or goodwill piecemeal, those sales are not a disposal of the business; they can only qualify under the second category, the disposal of assets after cessation (CG64045). For selling a business while it is still running, see selling a sole trade or partnership business.

What conditions apply to sole traders and partners?

CG64045 sets out four conditions:

  1. The asset was in use for the business at the date of cessation (section 169I(2)(b)).
  2. It is not shares, securities or any other asset held as an investment (section 169L(4)).
  3. You owned the business throughout the two years ending with cessation (section 169I(4)(a)). A partner is treated as owning the business carried on by the partnership (section 169I(8)).
  4. The disposal takes place within the three years following cessation (section 169I(4)(b)).

The ownership period was one year for disposals before 6 April 2019. The rate for qualifying gains on disposals from 6 April 2026 is 18% and the lifetime limit is £1 million (CG63955, CG64125).

When does a business cease?

The date of cessation is a question of fact (CG64105). HMRC’s Business Income Manual at BIM80565 says a business ceases when it closes its doors in circumstances that turn out to be permanent, even if the owner hoped to carry on. A decision to wind down does not by itself end the trade if trading activity continues. CG64045 points to this same Business Income Manual guidance for BADR, so the date used for the final income tax computations and the BADR claim should be consistent and recorded clearly. See post cessation receipts and expenses for the income tax side.

How is the three year window counted?

Section 169I(4)(b) requires the cessation date to fall within the three years ending with the date of the disposal. The date of disposal follows the normal rules: where an asset is sold under an unconditional contract, the disposal is made when the contract is made, not on completion (section 28 TCGA 1992). For a conditional contract, it is when the condition is satisfied. Exchanging contracts on a property inside the window is therefore what counts, even if completion follows later.

CG63975 and CG64045 both state that the three year period is a statutory limit and HMRC has no discretion to extend it. A slow property market, a planning delay or a buyer pulling out does not help.

Illustration only.

Tom has run a joinery business on his own for twelve years. He stops trading on 30 June 2026 and sells the machinery that summer. The workshop he owns does not sell, and he exchanges unconditional contracts on 15 May 2029 with completion on 1 August 2029. The disposal date is 15 May 2029, within three years of 30 June 2026, so a gain of £150,000 on the workshop qualifies at 18%, costing £27,000. Had he exchanged on 1 July 2029, the gain would be taxed at 24% if he is a higher rate taxpayer, costing £36,000.

What about shareholders when a company stops trading?

For shares, condition B in section 169I(7) gives the same shape of window. The personal company, trading company and officer or employee conditions must have been met for the two years ending with the date the company ceased to be a trading company, and the shares must be disposed of within three years of that date. The gov.uk guidance summarises this as still qualifying if you sell your shares within three years of the company stopping trading.

A company can stop being a trading company without closing, for example by selling its trade and keeping the proceeds invested. Where the change is gradual, HMRC may take the date as the end of the relevant accounting period (CG64105). See what counts as a trading company and BADR on a members’ voluntary liquidation, where distributions must also fall within the three years.

What if the asset was used by a company that ceased?

The category for assets after cessation only applies to a business carried on by you or your partnership. CG64045 says it does not cover assets formerly used by a company that has ceased to trade. If you own the asset personally and the company used it, relief can instead come through the associated disposal rules in section 169K. For that route, CG63998 says HMRC may accept an asset sale as linked to the main disposal if it happens within one year of cessation, or within three years if the asset has not been leased or used for any other purpose after the business ceased. See BADR on associated disposals.

What happens if the assets are sold later?

A sale outside the window gets no BADR, and the gain is charged at the main rates: from 6 April 2026, 18% to the extent it falls within the unused basic rate band and 24% above it (gov.uk). Missing the window does not affect relief already given on assets sold in time; it only affects the late sale. If you expect a long sale process, it is worth marketing the main assets well before the third anniversary of cessation, given that exchange of contracts, not completion, is the date that counts. See capital gains tax rates.

How and when is the claim made?

The claim must be made by the first anniversary of 31 January following the tax year of the disposal (CG63970). If assets are sold over several tax years after cessation, each year’s sales are claimed separately and all count towards the same lifetime limit.

What mistakes come up?

  • Moving out of premises or stopping using equipment before the business ends, so the asset was not in use at cessation.
  • Counting three years from completion rather than from exchange, or from the last invoice rather than the true cessation date.
  • Assuming HMRC will extend the window for a delayed sale.
  • Trying to claim on company assets under the cessation rule instead of through the company or an associated disposal.
  • Letting the property to a tenant after the business closes and then relying on HMRC’s associated disposal guideline.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.