The Chancellor, John Healey announced changes to Capital Gains Tax (CGT) reliefs for business owners and investors as part of the Budget measures. From 6 April 2027, the lifetime limit for Business Asset Disposal Relief (BADR) will be reduced from £1 million to £500,000. The change will apply to qualifying disposals made on or after that date, subject to special provisions for certain contracts entered into before 6 April 2027 and for some share reorganisations and exchanges of securities.
BADR allows eligible individuals to pay a reduced rate of CGT on qualifying gains when they sell all or part of a business, or qualifying shares in a personal company. The lifetime limit applies to the total qualifying gains on which an individual can claim the relief, rather than the value of the business being sold. Reducing the limit means that less of an individual’s lifetime gains may qualify for the reduced rate.
The government has also announced a new Founders’ Relief, intended to support founders and early investors who have made a significant, long-term contribution to the development of high-growth and innovative UK companies. It is intended to provide a 10% CGT rate on qualifying disposals of shares or securities from 6 April 2027, subject to the final rules. A consultation on the new Founders’ Relief has been launched and will close on 30 November 2026.
The Budget also announced a pilot Young Entrepreneurs Allowance in England, aimed at helping young people overcome the financial barriers to starting a business. Successful applicants will receive support towards their living costs during the first year of their business. The scheme is intended to help aspiring entrepreneurs who may have good business ideas but lack the personal financial support needed to get started. Further details of the pilot, including eligibility criteria and how to apply, are expected to be announced in due course.
