UK Budget creates 10% tax break for founders on up to £10M of gains
What's the deal? The UK government has unveiled a new "Founders' Relief" that will tax qualifying founders and early investors at 10% on capital gains up to a £10 million lifetime limit. Chancellor John Healey announced the measure at Budget 2026, delivered on October 28, 2026. It takes effect for disposals on or after April 6, 2027.
Who qualifies? The relief targets founders and early backers of "high-growth, innovative companies" that meet strict tests. Individuals must have held 25% of ordinary share capital from the start of trading, owned the shares for at least five tax years, and been UK resident for at least five continuous tax years before selling.
Why now? The move follows a 2024 increase in headline CGT rates, which currently stand at 18% and 24% depending on circumstances. The government says the relief is designed to make the UK "a location in which founders and early investors can start and scale their companies."
What's the catch? In the same Budget, the lifetime limit for Business Asset Disposal Relief (BADR) was cut from £1 million to £500,000. That makes the new break potentially valuable for qualifying scaleup founders, but far less useful to ordinary owner-managers who relied on BADR.
What happens next? A technical consultation launched alongside the Budget sets out the design and seeks views on how the relief will work in practice. Legislation will be introduced through amendments to the Finance Bill 2026.
The signal: This is a selective bid to keep high-growth businesses and their founders in Britain, not a broad restoration of the entrepreneur tax break BADR once offered. With the detailed rules still under consultation, much depends on how tightly the eligibility tests are drawn.
Image credit: Generated with Gemini
