A worked example
The owner sells 100% of the company to an employee ownership trust for £3 million in 2027: the same price as the trade sale on the selling your business page, so the two compare. The shares cost next to nothing, the owner's other income uses up the basic rate band, so the taxed gain is all at 24%, and every condition for the relief is met.
| Sale to the trust in 2027 | Before the Budget | After the Budget | Difference |
|---|---|---|---|
| Gain | £3,000,000.00 | £3,000,000.00 | |
| Chargeable: 50% of the gain | £1,500,000.00 | £1,500,000.00 | |
| Less the £3,000 annual exempt amount, taxed at 24% | £1,497,000.00 | £1,497,000.00 | |
| Capital gains tax | £359,280.00 | £359,280.00 | £0.00 |
| Kept from the £3 million | £2,640,720.00 | £2,640,720.00 | £0.00 |
| Held over: reduces the trustees' base cost | £1,500,000.00 | £1,500,000.00 |
Business Asset Disposal Relief cannot be claimed with the trust relief, so its new £500,000 limit does not touch this sale. It does change the trade sale on the selling your business page, from 6 April 2027:
| £3 million sale from 6 April 2027 | Before the Budget | After the Budget | Difference |
|---|---|---|---|
| Trade sale with BADR | £659,280.00 | £689,280.00 | +£30,000.00 |
| Sale to an employee ownership trust | £359,280.00 | £359,280.00 | £0.00 |
| Gap between the two | £300,000.00 | £330,000.00 | +£30,000.00 |
A trade sale made before 6 April 2027 is still under the £1 million BADR limit, so for that sale the gap stays at £300,000.
Separately, from 6 April 2027 a company arranging to become controlled by an employee ownership trust keeps access to EMI share options for its staff, as companies already controlled by one do.
When it takes effect
The trust relief is unchanged, so nothing new starts for it. The BADR limit applies to disposals from 6 April 2027, and the EMI change also starts on 6 April 2027.
Who it doesn't affect
An owner already selling, or planning to sell, to an employee ownership trust pays capital gains tax as before: the Budget did not change the trust relief or the 18% and 24% rates.
Where this comes from
- Budget 2026 (HM Treasury), Table 6.1 (policy decisions): no measure on the capital gains tax relief for disposals to employee ownership trusts
- Budget 2026: Overview of Tax Legislation and Rates (HMRC), section 1.6: the EMI exception extended to companies arranging to become controlled by an employee ownership trust, from 6 April 2027
- Budget 2026 OOTLAR, Annex A, capital gains: 24% for 2027/28, the £3,000 annual exempt amount, and the BADR lifetime limit of £500,000
- Budget 2026 (HM Treasury), policy decisions, "Business and enterprise taxation": companies moving to an employee ownership trust keep access to EMI, and the Business Asset Disposal Relief lifetime limit cut to £500,000, both from 6 April 2027
- Capital Gains Tax: Employee Ownership Trusts relief reduction (HMRC tax information and impact note, Budget 2025): for disposals from 26 November 2025, 50% of the gain is chargeable and 50% is held over; BADR is not available with the relief
- Capital Gains Tax rates (GOV.UK): 24% above the basic rate band from 6 April 2026
- Capital Gains Tax allowances (GOV.UK): the £3,000 annual exempt amount
Every figure on this page comes from the Budget documents published on GOV.UK on , and was checked by Alan Davidson FCA. Last updated . It is general information, not advice on your own position.