Position checked on 29 October 2026, the morning after the Budget. These are announcements, not yet law, so the detail may change. Each rate and date below says when it applies from.
The Budget on 28 October 2026 was better news for business owners than many feared. The main rates of Capital Gains Tax were left alone, and a new Founders’ Relief has been announced that could cut the tax on a sale sharply.
One relief gets smaller. For sales between £2 million and £10 million, though, the cost is small and the possible upside is large.
What has changed for people selling a business?
Founders’ Relief (new)
- A 10% rate on up to £10 million of lifetime gains, reported to start from 6 April 2027.
- Aimed at founders and significant early investors in high growth, innovative companies.
- The qualifying conditions have not been published yet.
Business Asset Disposal Relief
- From 6 April 2027, the lifetime limit on qualifying gains falls from £1 million to £500,000.
- Qualifying gains up to the limit are taxed at 18%.
- Gains above the limit are taxed at the standard Capital Gains Tax rates, which stay at 24% for higher and additional rate taxpayers.
The Chancellor said the Business Asset Disposal Relief change means no change for three in four people who claim it.
How small is the cut for a £2 million to £10 million sale?
Take an owner who is a higher rate taxpayer with a qualifying gain of £1 million or more, using the rates reported above.
- Today: £1,000,000 at 18% is £180,000 of tax.
- From 6 April 2027: £500,000 at 18% is £90,000, plus £500,000 at 24% is £120,000. That is £210,000 of tax.
The difference is £30,000, and on these rates that is the most the lower limit can cost an owner, however large the gain. On a £2 million sale it is 1.5% of the price. On a £10 million sale it is 0.3%.
Illustration only. It ignores the annual exempt amount, other reliefs and your own circumstances.
How big could the upside be?
This is where the Budget gets interesting. If Founders’ Relief applied to your sale, the saving could run into seven figures. Here is the tax on a sale at five sizes, today and from April 2027 with the relief.
- £2 million sale: tax falls from £420,000 to £200,000, a saving of £220,000.
- £4 million sale: tax falls from £900,000 to £400,000, a saving of £500,000.
- £6 million sale: tax falls from £1,380,000 to £600,000, a saving of £780,000.
- £8 million sale: tax falls from £1,860,000 to £800,000, a saving of £1,060,000.
- £10 million sale: tax falls from £2,340,000 to £1,000,000, a saving of £1,340,000.
In this range the relief could cut the tax bill by more than half, and the saving grows with every extra £2 million. It tops out at £1,340,000, because the relief covers only the first £10 million of lifetime gains.
Illustration only. It assumes the gain equals the sale price, a higher rate taxpayer who qualifies for Business Asset Disposal Relief today, and that Founders’ Relief would apply to the first £10 million of gains in place of it, with any gain above that taxed at 24%. It ignores the annual exempt amount and other reliefs. The conditions are unpublished, so this shows what is at stake, not who will qualify.
Will the new Founders’ Relief apply to you?
We cannot say yet, and nobody else can either. The coverage so far points to founders of high growth, innovative companies. If the conditions are drawn broadly, the relief could matter to many more owners.
The sensible position is to watch the detail rather than plan around it. Founders of growing businesses with real momentum have the most reason to pay attention.
Should this change when you sell?
The Budget is a good reason to start the conversation, not a reason to rush. A well prepared business sells for more than a hurried one, and that difference is usually far larger than any tax timing. Our guide on how long it takes to sell a business sets out why.
If you were already planning to sell within the next year or two, it is worth raising the timing with your accountant now. How the deal is structured also matters, so it helps to understand the difference between a share sale and an asset sale. Our general guide to tax when you sell a business covers the basics.
What we are watching next
- The published conditions and draft legislation for Founders’ Relief.
- Whether 6 April 2027 holds, and whether any transitional rules protect sales already agreed.
- The Government’s plan to modernise how company distributions are taxed from April 2028, where the detail is not yet known.
Nothing we have seen so far changes the rules for Employee Ownership Trusts, but we are checking the full Budget documents. We will update our guide to Employee Ownership Trust tax if that changes.
Thinking about selling?
If you are weighing up a sale, a free business valuation is a sensible first step. It tells you where you stand before you decide anything. You can also read how we work on our selling your business page.
This article is general information, not tax advice. Please speak to your accountant before making any decision based on it.
