Chancellor John Healey’s Autumn Budget on 28/10/2026 dropped a targeted lifeline for UK start-up founders and early investors. The new Founders’ Relief offers a 10% capital gains tax rate on up to £10 million of lifetime gains, but only if strict tests are met. At the same time, Business Asset Disposal Relief (BADR) lifetime limit halves to £500,000 from 06/04/2027. Successful entrepreneurs could save six figures, yet many will miss out.

Why This Matters Now

The Office for Budget Responsibility forecasts extra revenue from the bank surcharge and higher taxes on property and savings income, without broad rate rises. Founders’ Relief is narrowly drawn to support high-growth, innovative firms while the BADR squeeze raises funds elsewhere. If you plan an exit before or after April 2027, timing and eligibility checks are urgent.

Qualification Criteria: Step-by-Step Check

  • Confirm your company meets innovation, turnover and UK presence tests.
  • Hold at least 25% of shares for five continuous years.
  • Ensure the firm is high-growth and innovative, not a traditional business.
  • Verify you are a founder or early investor, not a later employee.

Tech and start-up founders are far more likely to qualify than owners of established SMEs. Traditional business owners should analyse their position immediately.

Pre- and Post-Budget CGT Examples

Consider a £2 million gain.

  • Pre-Budget BADR: 10% on £1 million (£100,000 tax) plus 20% on the balance (£200,000) totals £300,000.
  • With Founders’ Relief: 10% on the full £2 million equals £200,000, saving £100,000.

For an £8 million gain the difference widens dramatically. Old rules could mean over £1.4 million tax; Founders’ Relief caps it at £800,000. Run your exact figures through an interactive CGT calculator before any decision.

Timing Strategies Before April 2027

  • Accelerate exits into the current tax year if BADR still applies and you fail Founders’ Relief tests.
  • Delay modest gains until after 06/04/2027 only if Founders’ Relief is confirmed.
  • Review share schemes improvements announced alongside the relief; they may boost qualifying holdings.

Interaction with Employee Share Schemes and ISA Changes

The Budget also eased rules on employee share schemes, potentially helping more staff reach the 25% threshold. ISA limits on certain growth assets were tweaked, offering another shelter for smaller holdings. Combine these with Founders’ Relief for maximum efficiency, but watch anti-avoidance rules.

Potential Pitfalls to Avoid

Strict UK presence and turnover tests catch many out. Five-year holding periods cannot be backdated. Partial disposals may trigger complex apportionment. Seek specialist advice early; HMRC is expected to scrutinise claims closely.

Who Benefits Most?

Early investors in innovative UK tech firms stand to gain most. Traditional manufacturers or property-based businesses will usually fall outside the relief. The policy deliberately favours high-growth sectors to boost OBR growth forecasts.

Next Steps: Calculate Your Savings

Plug your projected gains into a specialist CGT and tax calculator today. Compare scenarios before and after 06/04/2027. Subscribe for updates on qualifying guidance and tool improvements as HMRC releases details.

Act before the window closes. The difference between 10% and standard rates could exceed £1 million on larger exits.