BADR halved, and a new
Founders' Relief

Selling your company is usually the biggest tax event of a business owner's life. The Autumn Budget changed the rules in two directions: the lifetime limit on Business Asset Disposal Relief (BADR) — the relief that lets qualifying owners pay a reduced Capital Gains Tax rate on a sale — is being halved, while a new and much more generous Founders' Relief has been proposed for a narrow group of fast-growing companies. Both apply to disposals on or after 6 April 2027.

BADR: same rate, smaller limit

BADR keeps its 18% rate. What changes is the lifetime limit on gains that qualify: it falls from £1 million to £500,000 for disposals on or after 6 April 2027. Gains above the limit are taxed at the main Capital Gains Tax rate of 24%.

	Disposal before 6 April 2027	Disposal from 6 April 2027
BADR lifetime limit	£1,000,000	£500,000
BADR rate	18%	18%
Main CGT rate on gains above the limit	24%	24%
Maximum saving against the 24% rate	£60,000 (6 points on £1m)	£30,000 (6 points on £500k)

In other words, the most BADR can save you drops by around £30,000. For an owner with a gain of £1 million or more, the change is meaningful but not dramatic. For smaller sales the relief still works as before, provided the gain fits within the new limit.

Founders' Relief: a 10% rate for scale-ups

The Budget proposes a new relief that taxes qualifying gains at just 10%, up to a lifetime limit of £10 million per person. At the current 24% main rate that is worth up to £1.4 million in tax. The limit is reduced by amounts you have already claimed under BADR and Investors' Relief.

Who is expected to qualify

The conditions are demanding, and aimed at companies that have grown quickly. Under the proposals, as described by KPMG:

• You must be an individual who held at least 25% of the ordinary share capital (with matching voting and distribution rights) when the trade began, and have held the shares for at least five years.
• You must have been UK resident for at least five continuous tax years before the disposal. Trustees are not expected to qualify.
• The company must be within UK Corporation Tax with a substantial UK presence for the five accounting periods before sale, and meet trading conditions.
• In the period before the sale, the company needs turnover of at least £10 million and at least 15 qualifying full-time employees.
• It must also meet at least two of three growth tests: 25% average annual compound growth in turnover, 25% growth in headcount, or at least £1.5 million of qualifying R&D expenditure with R&D relief claimed.

That rules out most owner-managed businesses, including most of the companies we work with. If your business is a consultancy, a freelance limited company or a small trading company, assume BADR is the relief that matters for you.

Planning before April 2027

• If a sale is already on the horizon, compare the tax cost of completing before and after 6 April 2027. The timing can change the outcome by up to £30,000 on BADR alone.
• Check you meet the BADR conditions. Broadly, you need to be an officer or employee holding at least 5% of the ordinary shares and voting rights, for at least two years before the sale. Do not assume you qualify.
• Do not rush a sale for tax reasons alone. A sale that is wrong commercially will not be saved by a tax relief.
• If you may be a Founders' Relief candidate, your adviser may wish to respond to the consultation before 30 November 2026.

For background on how Capital Gains Tax works for owners, see our guide to Capital Gains Tax in 2026, and our guide to holding companies if you are considering restructuring before a sale. For the whole Budget, see the Autumn Budget 2026 overview.

This article is for general information purposes and does not constitute tax advice. The measures described were announced in the Autumn Budget on 28 October 2026 and remain subject to legislation in Finance Bill 2026-27, so details may change. Always speak to a qualified accountant before acting on them.