Selling your Bournemouth business and its building after Budget 2026: Business Asset Disposal Relief halves to £500,000

Budget 2026 halves the lifetime limit for Business Asset Disposal Relief (BADR) from £1 million to £500,000, and the new limit applies to disposals made from 6 April 2027 (Budget 2026, para 6.261). For owner-operators in Bournemouth, Christchurch and Poole who own the hotel, guest house, restaurant, care home or workshop they trade from, the change lands on the biggest asset most of them hold: the building. This piece, from Business Mortgages Broker, sets out what the Budget actually says, how it interacts with the way your premises are held, and what to look at before April 2027.

What the Budget changes, in its own words

BADR is the relief that lets a qualifying business owner pay a reduced rate of Capital Gains Tax on a qualifying disposal. The Budget describes it as offering "a reduced 18% rate of Capital Gains Tax on qualifying disposals" and says the government will "reduce the lifetime limit on gains eligible for BADR ... from £1 million to £500,000. The new lifetime limit will apply to disposals made from 6 April 2027" (Budget 2026, para 6.261).

Two points follow from that wording:

• It is a lifetime limit. Gains on which you have already claimed BADR count towards it, so an earlier sale may leave you little or nothing under the new ceiling.
• The limit changes, not the rate. The 18% rate stays; what shrinks is how much gain can be taxed at it.

The Treasury says "three-quarters of BADR claimants will still receive relief on their entire gain" (Budget 2026, para 2.53). That may hold for a typical small business sale. It is less likely to hold for an owner of a long-held seafront or town-centre freehold, where the property gain alone can run past £500,000.

Why this bites harder on businesses that own their building

A hotel on the West Cliff or East Cliff, a Boscombe guest house or a Westbourne restaurant is often a property business in disguise. The trade may be worth a modest multiple of profit, but the freehold has usually risen in value over the years. When the business is sold with the building, most of the gain often sits in the bricks rather than the goodwill.

Under the old £1 million limit, many family owners could sell the whole package and keep most or all of the gain inside the 18% band. From 6 April 2027 that headroom is cut in half, and the part of the gain above £500,000 is taxed at the ordinary Capital Gains Tax rate instead.

Illustrative example. The figures below are invented to show the mechanics, not drawn from any real business, and ignore costs, other reliefs and earlier claims.

• An owner sells the shares in a trading company that owns its Bournemouth hotel freehold, realising a total gain of £900,000.
• On a disposal before 6 April 2027, with no earlier BADR claims, the whole £900,000 could fall within the £1 million lifetime limit and be taxed at 18%.
• On a disposal on or after 6 April 2027, only £500,000 can be taxed at 18%. The other £400,000 is taxed at the ordinary Capital Gains Tax rate.

The extra tax is the gap between 18% and the ordinary rate, applied to £400,000. That is why the timing and structure of a sale deserve a fresh look now.

Inside the company or outside it: where should the premises sit?

How you hold the building matters as much as when you sell. There are three common set-ups among Bournemouth owner-operators.

1. The company owns the building

If your trading company owns the freehold and you sell the shares, the property value is part of the share price and the whole gain is measured on the shares. The buyer takes the building with the business, often funded by an owner-occupier commercial mortgage that is sized on whether trading profit covers the debt.

There is one Budget point for share sales. Stamp taxes on shares are to be replaced by a new Securities Transfer Tax "from late 2027" (Budget 2026, para 6.179). The detail is not set out in the Budget, so if a buyer is likely to complete after that date, ask your adviser how it will apply.

2. You own the building personally and the company pays you rent

Many owners keep the freehold in their own name and let it to their company. When you then sell the business, the building can be sold alongside it, or kept and let to the buyer.

If it is sold alongside the shares, BADR can sometimes extend to the premises as what is known as an associated disposal, but the rules are strict, and relief can be restricted where the company has paid you a market rent. This is an area for specialist tax advice rather than rules of thumb.

If you keep the building and let it, the Budget raises the rates of income tax on property income for individuals. From 6 April 2027 the property basic rate will be 24%, the property higher rate 44% and the property additional rate 49%, across England, Wales and Northern Ireland (Budget 2026, para 6.246). A retirement plan built on living off the rent from a new operator needs modelling at those rates.

3. A separate property company holds the building

Some families hold the freehold in a separate company that lets to the trading company. That keeps the rent inside corporation tax, which the government has committed to "capping the headline rate at 25%" (Budget 2026, para 2.54). The Budget's property income rate rises apply to individuals; a company landlord pays corporation tax instead. A separate property company may also give you the option of selling the trade and keeping the building, or selling each to different buyers. Take advice before moving a building between owners, because the move itself can trigger tax and legal costs.

Passing the business to the next generation

Many hotels and guest houses along the cliffs have passed from parent to child rather than to an outside buyer. The government plans to modernise the rules on company distributions from April 2028, and says the reform will "protect capital treatment for genuine changes in ownership, including families passing down their business" (Budget 2026, para 6.181). Draft legislation is expected in 2027. If the next generation will buy you out over time, watch for it, because it will shape how those payments are taxed.

The Budget document does not mention inheritance tax Business Property Relief.

What about the new Founders' Relief?

The Budget also introduces "a 10% CGT rate on up to £10 million of lifetime gains for qualifying founders of high-growth, innovative companies from 6 April 2027" (Budget 2026, para 6.257). The detailed design is going to consultation. Do not assume an established hotel, guest house or local trading company will qualify.

Other Budget points for Bournemouth hospitality owners

• Overnight Visitor Levy. The government plans to legislate so that all Strategic Authorities have the power to introduce an Overnight Visitor Levy (Budget 2026, para 4.60), with local leaders able to set out revenue plans by March 2028 (para 6.40). A Wessex devolution agreement is among ten listed as being in their final stages (para 4.67). Any future levy would affect how a buyer values a hotel's trading income.
• Wage costs. The National Living Wage rises by 3.9% to £13.21 an hour on 1 April 2027 (para 6.128). Lenders will build that into a buyer's forecast profit, and so into what the buyer can borrow and pay.

What to do now

1. Find out how much BADR you have already used. Your accountant can confirm your remaining lifetime limit. That number decides whether the April 2027 change matters to you at all.
2. Get a current valuation of the building and the business separately. You need to know how much of the eventual gain sits in the freehold and how much in the trade.
3. Look at the ownership structure. Confirm whether the building is in the company, in your own name or in a separate company, and what rent, if any, has been paid. Ask a tax adviser how that affects BADR and the associated disposal rules.
4. Decide whether timing matters. If a sale was already in prospect for 2027 or 2028, ask whether completing before 6 April 2027 is realistic and whether any transitional rules apply once the legislation is published. Do not rush a poor deal to beat a tax date.
5. Think about the buyer's finance early. Most buyers of owner-occupied hotels and guest houses need a commercial mortgage. Clean accounts and clear occupancy records make their application, and your sale, more likely to complete.
6. If you plan to keep the freehold and let it, model the rent at the property income rates of 24%, 44% and 49% that apply from 6 April 2027 if you hold it personally.

Key dates

• 28 October 2026: Budget 2026 published.
• 1 April 2027: National Living Wage rises to £13.21; higher Small Business Rates Relief thresholds for qualifying retail, hospitality and leisure properties.
• 6 April 2027: BADR lifetime limit falls to £500,000; property income tax rates of 24%, 44% and 49%; Founders' Relief starts.
• Late 2027: Securities Transfer Tax replaces stamp taxes on shares.
• April 2028: Distributions framework reform takes effect.

Brought to you by Business Mortgages Broker

This article is brought to you by Business Mortgages Broker, which arranges owner-occupier business mortgages for UK trading companies, including buyers taking on hotels, guest houses and other owner-occupied premises. Founder Matt Lenzie has 25 years in financial services, raising debt and equity, and has arranged around £400m of property finance. If you are buying, refinancing or restructuring premises on the south coast, see the guide to business mortgages in Bournemouth.

Source: HM Treasury, Budget 2026 (HC 726), 28 October 2026. This article is general information, not tax or financial advice. Speak to a qualified tax adviser before acting on any of the points above.