A worked example
The founder sells 100% of a trading company for £3 million in the 2027/28 tax year. The shares cost next to nothing, so the gain is £3 million. They have owned the company for 12 years, meet the conditions for Business Asset Disposal Relief (BADR), have never claimed it before and make no other gains in the year.
| Sale in 2027/28 | Before the Budget | After the Budget | Difference |
|---|---|---|---|
| Gain | £3,000,000.00 | £3,000,000.00 | |
| Taxed at the BADR rate of 18% | £1,000,000.00 | £500,000.00 | −£500,000.00 |
| Tax on that part | £180,000.00 | £90,000.00 | |
| Taxed at 24%, after the £3,000 annual exempt amount | £1,997,000.00 | £2,497,000.00 | +£500,000.00 |
| Tax on that part | £479,280.00 | £599,280.00 | |
| Capital gains tax | £659,280.00 | £689,280.00 | +£30,000.00 |
| Kept from the £3 million | £2,340,720.00 | £2,310,720.00 | −£30,000.00 |
The £30,000 is the £500,000 that moves from 18% to 24%. The rates themselves (18% and 24%) and the £3,000 annual exempt amount did not change.
Founders' Relief is not assumed here. From 6 April 2027 a new 10% rate applies to up to £10 million of lifetime gains for founders of high-growth, innovative companies, less any BADR claimed from that date. As proposed in the technical consultation, the founder must have held at least 25% of the shares when the company's trade began, owned the shares for five years and been UK resident for five tax years. The company must have had turnover of at least £10 million and at least 15 full-time employees in the accounting period before the sale, and pass two of three tests: average growth of 25% a year in turnover over three accounting periods, the same growth in headcount, or at least £1.5 million of research and development claimed for R&D relief in the three years before the sale. The conditions are still being consulted on, so this example uses BADR only. The Founders' Relief page sets out what is settled and what is still proposed.
When it takes effect
The £500,000 limit applies to disposals made on or after 6 April 2027, and is to be legislated in Finance Bill 2026-27. HMRC says special provisions apply to contracts entered into before 6 April 2027 that have not completed by then, and to some share reorganisations and exchanges not completed by then; the detail is in the Finance Bill. Founders' Relief also starts on 6 April 2027, for disposals on or after that date.
Who it doesn't affect
An owner whose lifetime gains qualifying for BADR are £500,000 or less: the government expects three-quarters of claimants to stay within the new limit. Anyone selling shares that do not qualify for BADR pays 18% or 24% as before.
Where this comes from
- Budget 2026 (HM Treasury), policy decisions, "Business and enterprise taxation": the Business Asset Disposal Relief lifetime limit cut from £1 million to £500,000 for disposals from 6 April 2027, and the new Founders' Relief
- Budget 2026: Overview of Tax Legislation and Rates (HMRC), sections 1.32 and 1.33: Founders' Relief from 6 April 2027, and the £500,000 BADR limit, with special provisions for contracts made before 6 April 2027
- Budget 2026 OOTLAR, Annex A, capital gains: 18% and 24% for 2027/28, the £3,000 annual exempt amount, BADR at 18% with a £500,000 lifetime limit, and Founders' Relief at 10%
- Budget 2026 (HM Treasury), "Making fair choices on revenue raising": the BADR lifetime limit
- Government response to the Tax Support for Entrepreneurship call for evidence (HM Treasury, Budget 2026), paragraphs 7.22 to 7.24 and 7.31: Founders' Relief at 10% on up to £10 million, its conditions still to be consulted on, and the BADR limit
- CGT Founders' Relief: technical consultation (HM Treasury and HMRC, Budget 2026), paragraphs 2.4, 2.5, 2.7 and 3.2: the proposed conditions for the founder and the company
- Capital Gains Tax rates (GOV.UK): 18% and 24% from 6 April 2026
- Capital Gains Tax allowances (GOV.UK): the £3,000 annual exempt amount
- Business Asset Disposal Relief (GOV.UK): 18% on qualifying disposals from 6 April 2026, and the conditions to meet for two years before the sale
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.