Autumn Budget 2026: What Business Owners and Shareholders Need to Know

One of the most significant announcements in this year's Budget are the changes to the lifetime limit on capital gains eligible for BADR (which offers a rate of 18% CGT on qualifying disposals) will be reduced from £1 million to £500,000 with effect from 6 April 2027.

Another new measure is the announcement of a new Founders’ Relief, which will provide on qualifying disposals a rate of 10% CGT on up to £10 million of lifetime gains for qualifying founders of high-growth and innovative companies from 6 April 2027.

The announcement was followed by a release of a technical consultation which closes on 30 November 2026 which proposes the following qualifying conditions which must be met to qualify for the new Founders’ Relief. 

The individual will need to:

• have held at least 25% of the company’s share capital at the point when trading activity commenced;
• have held the shares for at least 5 years prior to disposal; and
• have been a UK resident for at least 5 continuous tax years prior to disposal.

The company will also need to:

• be in scope of UK Corporation Tax and have a substantial UK presence for at least 5 accounting periods prior to disposal;
• be a trading company, or the holding company of a trading group, without substantial non-trading activities or excluded trading activities; 
• continue the new trade it was established for when the founder's shares were issued with no major change in the nature of the trade; 
• have generated turnover of at least £10 million in the accounting period prior to disposal; and 
• have employed at least 15 qualifying full-time employees in the accounting period prior to disposal. 

In addition, the company will need to be able to demonstrate success in terms of growth and innovation. The turnover and headcount tests will be measure growth by comparing each accounting period with the one before and will set a minimum level that must be met in the period before the first of the three years of consecutive growth.

For a disposal of shares to qualify, the company will need to meet at least two of the following three: 

• Turnover test - annual average compound growth in turnover of 25% across three consecutive accounting periods within the ten years before disposal, with turnover of at least £10 million in the accounting period before the first of these three periods; 
• Headcount test - annual average compound growth of at least 25% in qualifying full-time equivalent employees across three consecutive accounting periods within the ten years before disposal, with at least 15 full-time employees in the accounting period before the first of these three periods; or 
• Innovation Test - the company must (1) have incurred qualifying expenditure of £1.5 million or more on research and development (R&D) for which it met all of the conditions to make an R&D tax relief claim and (2) have claimed R&D tax reliefs for that expenditure for an accounting period or periods ending within the three years before disposal.

The announcement may be of particular interest to founders considering a future disposal of their business and could influence transaction timing and succession planning decisions, although it should be noted that the proposed qualifying criteria may mean this relief is not available for many founder shareholders.