Published: 01/12/2025 By Katie Drake
If you are considering closing a solvent company, you may have heard about Business Asset Disposal Relief (BADR) and the tax advantages it can offer. As insolvency practitioners, we are often asked whether BADR still makes a Members’ Voluntary Liquidation (MVL) worthwhile and the answer is: it can, but the position has changed.BADR has changed
BADR allows qualifying shareholders to pay Capital Gains Tax at a reduced rate when extracting funds from a solvent company. Many business owners still believe this rate is 10%, but this is no longer the case.
The BADR tax rate has increased and is set to rise further:
- It was 10%
- It increased to 14% from April 2025
- It will rise again to 18% from April 2026
This means the timing of a liquidation is now more important than ever, as delaying a liquidation could directly reduce what you ultimately receive. This is why early, informed advice is crucial.
How BADR applies in a Members’ Voluntary Liquidation (MVL)
In an MVL, company funds are distributed as capital rather than income. Where BADR applies, this can still result in a more tax-efficient outcome than taking dividends – particularly for higher rate tax payers.
However, as tax rates converge, an MVL should never be treated as a “standard” solution. At Turpin Barker Armstrong, we assess:
- Whether BADR is genuinely available
- Whether an MVL is still the most tax-efficient option
- Whether alternative strategies should be considered
HMRC scrutiny and anti-avoidance rules
HMRC takes a close interest in solvent liquidations, particularly where a similar business continues afterwards. There are anti-avoidance rules in place, and BADR is not automatic.
This is why it is important that:
- The company has genuinely ceased trading
- The liquidation has a clear commercial purpose
- Proper advice is taken before any steps are implemented
Our advice
At Turpin Barker Armstrong, we specialise in solvent liquidations and MVLs, working closely with tax advisers to ensure:
- Your position is reviewed before decisions are made
- Risks are identified early
- The liquidation process is efficient, compliant, and tax-aware
We believe in clear guidance, commercial understanding, and protecting your outcome.
If you are considering closing your company, the earlier you speak to us, the more options you will have. What worked for others in the past may no longer be appropriate today – especially with BADR rates changing.
A short conversation with Turpin Barker Armstrong at an early stage can make a significant financial difference.
Time is running out
With the 6 April 2026 deadline, it is critical for business owners to act immediately.
Our specialist team have extensive experience in dealing with MVLs and are ready to guide business owners through the MVL process ensuring the most tax-efficient outcome. Please do get in touch for an initial free and no obligation consultation.