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Autumn Budget 2026 and the new £10m Founders’ Relief

Wednesday, 4 November 2026

For business owners considering an exit, the announcement that deserves most attention in this year’s Budget is the new Founders’ Relief. From 6 April 2027, qualifying founders could pay just 10% Capital Gains Tax on up to £10 million of lifetime gains. For those who qualify, the impact on the proceeds of a sale could be significant. [1]

The reduction in Business Asset Disposal Relief (BADR) is less welcome, but needs perspective. At current rates, halving its lifetime limit from £1 million to £500,000 adds at most £30,000 to an individual’s tax bill compared with retaining the existing limit, assuming gains otherwise taxed at 24%. Against the pre-Budget rumour mill, that is a relatively modest change for owners selling businesses worth several million pounds. [2]

What Founders’ Relief could mean for your sale

The proposed relief offers a 10% tax rate on qualifying gains, up to a £10 million lifetime limit per person. That limit applies to the gain on your shares, rather than the valuation of the company or the total sale proceeds. More than one shareholder in the same business could qualify, provided each meets the conditions. [1] [3]

For illustration, a £5 million qualifying gain taxed entirely at 10% would produce a £500,000 tax bill, compared with £1.2 million at 24%: a £700,000 difference before considering BADR, other reliefs, allowances or losses. On £10 million of qualifying gains, the equivalent difference is £1.4 million. These are illustrations of the rate difference, not an estimate of any particular owner’s tax liability.

This creates a potentially valuable opportunity for qualifying founders to retain more of the value they have built. The relief is intended to apply to qualifying disposals on or after 6 April 2027, with its detailed design still subject to consultation, which closes on 30 November 2026. [3]

Who could qualify

Calling yourself a founder will not be enough. Under the consultation proposals, the individual must have held a 25% ordinary equity stake with corresponding rights when the original trade, or preparations for it, began, held the shares for at least five years and been UK tax resident for five continuous tax years before disposal. [3]

The business must meet UK presence and trading conditions, including continuing its original trade without a major change, and have at least £10 million turnover and 15 qualifying full-time employees in the accounting period before disposal. Certain activities, including financial services and property development, are excluded. It must also satisfy at least two of three tests: [3]

  • Turnover growth averaging 25% a year on a compound basis across three consecutive accounting periods within the previous ten years, starting from a turnover base of at least £10 million.
  • Qualifying employee growth averaging at least 25% a year on the same basis, starting from at least 15 full-time employees.
  • At least £1.5 million of qualifying R&D expenditure with the required R&D tax relief claims for accounting periods ending within the previous three years.

These are demanding tests. Many successful owner-managed businesses will fall outside them. Equally, businesses meeting both growth tests could qualify without meeting the R&D test. The practical starting point is an early eligibility review with your tax adviser, supported by the relevant ownership, financial and employment records. [3]

The BADR change in perspective

From 6 April 2027, BADR’s lifetime limit will fall to £500,000 of qualifying gains. Its rate remains 18%, compared with the standard 24% rate applicable to most gains on a substantial business sale. [2]

For an owner with £1 million of qualifying gains and their full lifetime allowance unused, the comparison is straightforward:

Treatment of a £1 million gain Illustrative CGT
Existing £1 million BADR limit at 18% £180,000
£500,000 at 18% plus £500,000 at 24% £210,000
Additional tax from the limit reduction £30,000

This example ignores allowances and losses and assumes no Founders’ Relief. The effect can be smaller where gains are lower or BADR has already been used. Prior claims count towards the reduced lifetime limit. [2]

An additional £30,000 matters, but it should be weighed against the price, certainty and terms of the transaction. A rushed sale or a weaker offer could cost considerably more. For eligible founders, the potential benefit of the new relief may also outweigh the BADR reduction. BADR and Investors’ Relief claims made from 6 April 2027 will reduce the available £10 million Founders’ Relief limit. [1]

Other measures affecting business investment

The Budget also increases Small Business Rates Relief thresholds for qualifying retail, hospitality and leisure properties in England from April 2027. Full relief extends to £18,000 rateable value, with tapered relief up to £21,000. The main first-year capital allowance rises from 40% to 50% from 1 January 2027, although the main writing-down allowance falls to 12% from April 2027. The effect will depend on the business and its investment plans. [4]

Planning your exit after the Budget

The Budget is a reason to review your options and likely net proceeds. If Founders’ Relief could apply, establish what evidence is needed and how the proposed rules affect timing. If it will not, quantify the BADR change before allowing a tax deadline to dictate your decisions. Signing before April is not automatically enough to preserve the existing treatment: special rules address some contracts and reorganisations. [2]

The commercial foundations of a successful sale remain the same: dependable earnings, clear growth opportunities, a capable management team and a competitive process that brings the right buyers to the table. Building those strengths takes time and can have a much greater effect on your outcome than the BADR reduction.

At Bluebox Corporate Finance, we help owners prepare for sale, understand their options and run a disciplined process to maximise value. Working alongside your tax and legal advisers, we can help you assess how a potential transaction fits your objectives and timetable.

If you are considering a sale, whether soon or several years from now, speak to the Bluebox team about preparing your business and planning your next steps.

Information correct as at 3 November 2026. Founders’ Relief remains subject to consultation and final legislation. This article provides general information, not tax or legal advice; individual circumstances require specialist advice.

Sources

[1] HMRC: New Founders’ Relief

[2] HMRC: BADR lifetime limit reduction

[3] HM Treasury: Founders’ Relief technical consultation

[4] HM Treasury: Budget 2026

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    Laurence Seward, Former Client

    Aligning ourselves early with Bluebox, and entrusting the team to guide us through their process proved to be a highly rewarding investment from all viewpoints. Bluebox’s support significantly enhanced both the value of our business and its ‘saleability’. I would highly recommend Bluebox to business owners contemplating an exit in the next two years. The earlier the engagement the better so far as I am concerned.

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