The Budget on 28 October 2026 announced two changes that matter to anyone thinking about selling their business, a cut to the Business Asset Disposal Relief lifetime limit and a new Founders’ Relief. Both take effect from 6 April 2027. Here we set out what has been announced, what it could mean for the timing of a sale, and how we can help.
What has changed for Business Asset Disposal Relief?
Business Asset Disposal Relief (BADR), formerly Entrepreneurs’ Relief, reduces the rate of Capital Gains Tax on qualifying gains when you sell all or part of your business. The BADR rate is currently 18%, compared with the main higher rate of Capital Gains Tax of 24%.
The Budget confirmed that the lifetime limit on gains that can qualify for BADR will halve, from £1 million to £500,000, for qualifying disposals made on or after 6 April 2027. The 18% rate itself is unchanged.
- It is a lifetime limit. Any BADR or Entrepreneurs’ Relief you have claimed in the past counts towards the new £500,000 limit.
- It applies to each individual. Each qualifying shareholder has their own lifetime limit.
- The extra cost is capped. For a shareholder with qualifying gains of £1 million or more and no earlier claims, the change means up to around £30,000 more tax, as £500,000 of gain moves from the 18% rate to 24%.
For owner-managers with larger gains, and particularly where there are several shareholders, the combined impact across a shareholder group can be significant.
The new Founders’ Relief
Alongside the BADR change, the government announced a new Capital Gains Tax Founders’ Relief, also for qualifying disposals of shares from 6 April 2027. Coverage of the Budget describes a 10% rate on up to £10 million of lifetime gains, aimed at founders and early investors who have made a significant long-term contribution to high-growth, innovative UK companies.
The detailed rules are still being designed, with a technical consultation open until 30 November 2026. Early commentary suggests the tests will cover areas such as shareholdings, turnover, headcount, growth and spending on research and development. From our current understanding, these requirements are likely to be narrow, and very few companies will be able to qualify. For the majority of owner-managed businesses, BADR will remain the relevant relief, and we will keep the position under review as the final rules emerge.
Key dates
- 28 October 2026. Changes announced in the Budget.
- 30 November 2026. Technical consultation on Founders’ Relief closes.
- 5 April 2027. Last day for disposals under the current £1 million BADR limit, subject to the special rules for contracts that have not completed.
- 6 April 2027. The £500,000 BADR limit and Founders’ Relief take effect, subject to the Finance Bill 2026-27.
What this means for the timing of a sale
HMRC has said there will be special provisions for contracts entered into before 6 April 2027 that have not completed by that date, and for certain share reorganisations and exchanges of securities. The detail will follow in the draft legislation, so exchanging contracts before the deadline may not be enough on its own. Where a sale is brought forward, the safest aim is to complete before 6 April 2027, with your tax advisor confirming the position. Alongside your corporate legal team, we can advise on the advantages and disadvantages of a split exchange and completion compared with a simultaneous exchange and completion, so the timetable works for both the tax position and the deal itself.
That leaves a window of a little over five months from the Budget. As we explain in How do I sell my business?, a full sale process typically takes nine to twelve months, so not every business will be able to complete in time. However, there may be another way we can help.
A faster, lighter-touch route to completion
Where the timescales are tight, an early conversation with us is the most important step. In the right circumstances we can provide a lighter-touch M&A service, focused on reaching completion as quickly as possible, to try to complete before 6 April 2027. This is most achievable where:
- a buyer is already known, for example an approach you have received, or a trade partner or competitor that has expressed interest
- the management team is looking to buy the business through a Management Buy-Out
- the financial information, contracts and compliance are already in good order, so due diligence can move quickly
- all shareholders are aligned on selling and on the terms they would accept
A faster process still needs the right team around you, including corporate tax and legal advisors working to the same timetable, and we will always be honest about whether completing before the deadline is realistic. Rushing a sale to save tax should never come at the expense of the right buyer, the right price or the right terms.
If completion before April 2027 is not possible
For many owner-managers the right answer will be to sell later, when the business and the market are ready. The changes then become part of your planning rather than a deadline. Through our Exit Readiness work, we can help you
- understand the likely value of your business and the potential tax on a sale, working alongside your tax advisor
- plan the timing of an exit around the new limit and your personal objectives
- consider the structure of a transaction and how the proceeds may be shared between shareholders
- understand whether Founders’ Relief could be relevant once the qualifying conditions are confirmed
- build value in the business, so that growth in value outweighs the cost of the reduced relief
Budget changes like this naturally make owner-managers think about timing. For some, a carefully run but faster process could still complete before April 2027, and for others the better outcome will come from planning properly and selling at the right time. Either way, the earlier we have the conversation, the more options there are.
Sources include HM Revenue & Customs, Budget 2026 overview of tax legislation and rates, and published commentary from tax advisors following the Budget.
