If you’re thinking about selling your company or retiring in the next few years, the recent Budget has made changes that could have a real impact on how much tax you pay on the way out.
✂️ Business Asset Disposal Relief is being halved
Business Asset Disposal Relief will see its lifetime limit cut from £1m to £500,000 for qualifying disposals on or after 6 April 2027. This comes on top of rate rises that have already happened: the BADR rate is 18% for disposals on or after 6 April 2026. The rate was 14% from 6 April 2025 to 5 April 2026, and 10% before that.
For a business owner with gains above £500,000, that means a larger share of the sale proceeds will fall into the standard Capital Gains Tax rates after April 2027.
🚀 A new Founders’ Relief, but for the few
The Budget also introduced a brand new relief. A new Founders’ Relief will apply a 10% rate of capital gains tax to qualifying share disposals, up to a lifetime limit of £10m of gains per individual, from 6 April 2027.
It sounds generous, but the proposed conditions are tough. They include a 25% stake when trading began, a five-year holding period, at least £10 million of turnover, 15 full-time staff, and either rapid growth or significant R&D. The initial policy paper estimates that approximately 600 individuals per year could benefit from the relief. In other words, most owner-managed businesses won’t qualify, and BADR will remain the relevant relief for the majority.
The rules aren’t final yet. HM Treasury’s technical consultation closes on 30 November 2026, and the final rules could change
✅ What should you do?
- If a sale or retirement is on the cards in the next couple of years, review your timeline now. A disposal before 6 April 2027 may still benefit from the full £1m BADR limit.
- Check how much of your BADR lifetime allowance you’ve already used.
- If your company is a fast-growing business that might meet the Founders’ Relief tests, consider responding to the consultation before 30 November.
🆘Please Remember
If you’d like to talk through how any of these changes may affect you or your business, please don’t hesitate to get in touch with your client manager. We’re here to help you plan ahead and make informed decisions over the coming months.