Founders’ Relief and the new limit on Business Asset Disposal Relief
From April 2027, owners selling a business get relief on less, unless they qualify for the new 10% Founders’ Relief. What each relief offers, and the questions to ask now.
Budget 2026 changes the arithmetic of selling a business. The lifetime limit for Business Asset Disposal Relief (BADR) halves to £500,000 for disposals from 6 April 2027, while a new Founders’ Relief offers a lower rate on much larger gains to a narrower group.
Show the data
| Founders’ Relief (up to £10m) | 10% |
|---|---|
| BADR (up to £500k) | 18% |
| Higher rate (above the limits) | 24% |
Who Founders’ Relief is for
The relief is aimed at founders and significant early investors in high-growth, innovative companies. The detailed tests, including what counts as a qualifying company and founder, are still out for consultation until 30 November 2026. Many owner-managed trading companies may not qualify, so it should not be assumed.
An example
An owner who sells shares for a gain of £1 million after 6 April 2027, with BADR but no Founders’ Relief, pays 18% on £500,000 and 24% on the rest: £210,000 in total, before the £3,000 annual exempt amount. Before the change, the whole gain would have qualified at 18%, costing £180,000.
Questions to ask now
- Is a sale realistic before 6 April 2027, and would bringing it forward be in the business’s interest?
- Have you, or family members who own shares, already used any of the lifetime limit?
- Could the company meet the Founders’ Relief tests once the detail is published?
- Would staged sales, earn-outs or share for share exchanges change the timing?
Tax should not drive a sale on its own. The draft rules may change after consultation; talk to us before you act.
Sources
This insight is general information, not advice for your circumstances. Talk to us before acting on it.