What condition must be met for business asset disposal relief (BADR) to be available?

Business Asset Disposal Relief (BADR) is designed to reduce the rate of capital gains tax on the sale of qualifying business assets, including shares in a personal company. For an individual to benefit from BADR, one of the key requirements is that they must own the shares for a minimum period. Specifically, ownership of the shares for at least two years prior to the disposal is necessary. This condition ensures that the relief is available only to individuals who have a substantial connection to the company, reflecting a longer-term investment.

While other options present various scenarios regarding share ownership and employment status within a company, the two-year ownership period is a crucial, definitive requirement for accessing BADR. This emphasizes the importance of long-term commitment and contribution to the business in order to qualify for tax relief on the gains made from the disposal of those shares. It reinforces the policy intention of the relief to reward genuine investors.