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Selling a care home: keeping more of the proceeds.

When you sell a care home, the tax on the gain is the most controllable variable in the proceeds calculation. <a href="https://www.gov.uk/business-asset-disposal-relief">Business Asset Disposal Relief</a> reduces the capital gains tax rate on qualifying disposals to <a href="https://www.gov.uk/capital-gains-tax/rates">18% from 6 April 2026</a> (not the 10% rate that applied before April 2025), compared with the standard higher-rate CGT of 24%. The difference is worth planning for, but the eligibility conditions can be broken by the structure of the business, and a propco/opco arrangement that made sense at acquisition can eliminate BADR at exit. The time to review the structure is well before the disposal, because the qualifying period for BADR runs backwards from the date of sale. We model the tax position, review ownership structure for BADR eligibility and prepare the financial information a buyer's due diligence will demand, so the exit is planned rather than reactive.

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18%
<a href="https://www.gov.uk/business-asset-disposal-relief">Business Asset Disposal Relief</a> rate for qualifying care business disposals <a href="https://www.gov.uk/capital-gains-tax/rates">from 6 April 2026</a>; applies on up to £1m of lifetime qualifying gains
6 percentage points
BADR saves 6 percentage points versus the <a href="https://www.gov.uk/capital-gains-tax/rates">standard higher-rate CGT of 24% from 6 April 2026</a>; on a £500,000 gain within the lifetime limit, that is a £30,000 difference
2 years
<a href="https://www.gov.uk/business-asset-disposal-relief">BADR requires 2 years of qualifying trading ownership</a> before the disposal date; a structure set up too close to sale can miss the window entirely

The challenges clients face.

Assuming BADR is still 10% when the rate is 18% from 6 April 2026

The <a href="https://www.gov.uk/business-asset-disposal-relief">BADR rate</a> was 10% for disposals on or before 5 April 2025, 14% between 6 April 2025 and 5 April 2026, and is <a href="https://www.gov.uk/capital-gains-tax/rates">18% for disposals from 6 April 2026</a>. Any exit tax modelling based on the historic 10% rate overstates the BADR benefit and understates the tax bill. This is the most common stale-figure error in care-home exit planning.

A propco/opco structure that unintentionally breaks BADR eligibility

<a href="https://www.gov.uk/business-asset-disposal-relief">BADR conditions</a> require the disposal to be of a qualifying trading business (or shares in a qualifying trading company). A structure where one company holds the property and another operates the care business can result in the property company being treated as an investment company rather than a trading company, breaking the eligibility condition. The structure must be reviewed before the exit window, not during the sale process.

Not meeting the 2-year qualifying period because the structure changed too recently

<a href="https://www.gov.uk/business-asset-disposal-relief">BADR requires 2 years of trading ownership</a> immediately before the disposal. A restructure, share issue or change in ownership that takes place within 2 years of a planned exit can reset the clock. Reviewing and fixing the structure must happen early enough for the qualifying period to run.

Treating an asset sale and a share sale as tax-equivalent for the seller

In a share sale, the seller disposes of the shares in the operating company and may be eligible for BADR on that disposal. In an asset sale, the company disposes of its assets and the proceeds sit in the company before being extracted, typically as a dividend or liquidation distribution. The tax treatment and the rate that applies differ between the two routes. The structure of the deal should be modelled for the seller's tax position before heads of terms are agreed.

How we help.

Model the CGT and BADR position on your disposal at the current 18% rate

We calculate the expected gain on disposal, apply <a href="https://www.gov.uk/business-asset-disposal-relief">BADR at 18%</a> where conditions are met and model the after-tax proceeds under both asset-sale and share-sale structures. The output is a number you can plan around, built on the current rates rather than the historic 10% figure that circulates in the sector.

Review propco/opco and ownership structure well before exit so BADR is not lost

We review the legal and ownership structure against the <a href="https://www.gov.uk/business-asset-disposal-relief">BADR qualifying conditions</a> with enough time to make changes and allow the 2-year window to run. Where a structure is at risk of breaking eligibility, we advise on remediation options. Where it is clean, we document the position so there is no dispute at the point of disposal.

Prepare the financial information a buyer's due diligence will demand

The information a buyer needs mirrors what we would review on <a href="/services/buying-a-care-home">the buy side</a>: disaggregated fee income, occupancy history, staffing cost analysis and capital-allowances history. Having this prepared and organised before going to market shortens the due-diligence period and reduces the risk of price chipping after an offer is agreed.

Common questions

How much capital gains tax will I pay when I sell my care home?
It depends on the gain, your other income and whether BADR applies. The <a href="https://www.gov.uk/capital-gains-tax/rates">standard higher-rate CGT rate is 24% from 6 April 2026</a>. If <a href="https://www.gov.uk/business-asset-disposal-relief">Business Asset Disposal Relief</a> applies, the rate is 18% on up to £1m of lifetime qualifying gains. The gap is 6 percentage points. Modelling the position before going to market lets you structure the disposal to maximise BADR eligibility.
Can I claim Business Asset Disposal Relief on the sale of my care home?
BADR is available on the disposal of a qualifying trading business or shares in a qualifying trading company, subject to a <a href="https://www.gov.uk/business-asset-disposal-relief">2-year ownership and trading condition</a>. Care operations generally qualify as a trading activity. The most common disqualifying factor in the care sector is a propco/opco structure where the property company is treated as an investment company rather than a trading company. The structure must be reviewed against the eligibility conditions before the disposal.
What is the BADR rate now?
<a href="https://www.gov.uk/business-asset-disposal-relief">Business Asset Disposal Relief</a> is <a href="https://www.gov.uk/capital-gains-tax/rates">18% for qualifying disposals from 6 April 2026</a>. The rate was 10% for disposals on or before 5 April 2025 and 14% between 6 April 2025 and 5 April 2026. The lifetime limit on gains eligible for BADR is £1m across all qualifying disposals.
Will my propco/opco structure affect the tax on sale?
Potentially yes, and significantly. <a href="https://www.gov.uk/business-asset-disposal-relief">BADR eligibility</a> requires the disposal to be of a trading business or trading company shares. In a propco/opco structure, the property company may be treated as holding investment property rather than carrying on a trade. If so, BADR on the property company shares may not be available. The analysis depends on the specific structure and the nature of activities in each entity.
Should I sell the shares or the assets of my care business?
A share sale transfers the company to the buyer; the seller disposes of the shares and any CGT (including BADR eligibility) is assessed at that level. An asset sale has the company dispose of its assets; the proceeds are then in the company and must be extracted, typically via liquidation or dividend, each with their own tax treatment. Buyers often prefer asset purchases because they acquire a clean entity; sellers often prefer share sales for the CGT treatment. Heads of terms should not be agreed before modelling both routes for the seller.
How far in advance should I plan the tax on selling my care home?
At minimum two years before the planned disposal, because <a href="https://www.gov.uk/business-asset-disposal-relief">BADR requires a 2-year qualifying period</a> running up to the date of sale. Any structural changes needed to secure BADR eligibility must be in place with enough time for the window to run. In practice, reviewing the ownership and corporate structure three to five years before a planned exit gives the most options and the lowest tax cost.

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