What Budget 2026 means for your business sale
For business owners considering a sale, Budget 2026 creates a familiar temptation: bring the deal forward before the tax rules change. Some should examine that option seriously. Every owner should first establish how much tax is actually at stake.
From 6 April 2027, the lifetime limit on gains qualifying for Business Asset Disposal Relief, or BADR, falls from £1 million to £500,000. The relief’s tax rate remains 18%. The ordinary higher rate of Capital Gains Tax remains 24%. The change reduces the amount of gain receiving favourable treatment; it does not impose a new tax rate on the entire sale price.
For someone with at least £1 million of qualifying gains, no previous BADR claims and the excess taxed at 24%, the reduction can mean £30,000 more tax. That matters, particularly when sale proceeds must fund retirement. It also provides a number against which to judge the commercial consequences of accelerating a transaction.
Saving £30,000 becomes less attractive if a hurried process costs £100,000 in price, or leaves the seller accepting an earn-out they would otherwise have resisted. An approaching deadline can strengthen a buyer’s negotiating position. Owners need to compare the likely net proceeds under different scenarios, including the possibility that a transaction does not complete on schedule.
Then comes the Budget’s more eye-catching offer. New Founders’ Relief promises a 10% CGT rate on up to £10 million of lifetime gains for qualifying disposals from 6 April 2027. For some owners, waiting could therefore be advantageous. But eligibility demands careful examination as the rules look pretty severe – only a very few business owners will qualify….
The technical consultation proposes conditions including a significant founding stake, five years’ share ownership and UK residence, at least £10 million of turnover and 15 qualifying employees before disposal, and meeting two of three growth and innovation tests. These are proposals awaiting final design. A successful, established family business will not qualify simply because its owner founded it.
Tax specialists quoted by City AM have highlighted precisely that tension: a generous new incentive for qualifying founders sits alongside diminished relief for other owners. The government appears to be directing support towards businesses demonstrating particular growth characteristics. That leaves many owners needing to calculate their own position before drawing comfort from the headline.
Timing also requires more care than choosing a signing date. HMRC’s accompanying announcement flags special provisions for contracts signed before 6 April 2027 but not completed, and for certain share re-organisations and exchanges. A signature before the deadline will not automatically settle the tax treatment. Transaction structures need specific advice.
There is a further change beyond April 2027. Reforms to company distributions and capital repayments are planned from April 2028, with draft legislation expected in 2027. The stated intention includes protecting capital treatment for genuine ownership changes and family succession. Owners considering an internal succession, demerger or capital repayment should follow that detail as it develops.
For an external sale, however, buyers will still examine the business in front of them. Can they rely on the earnings? Will customers stay when the founder leaves? Does management have the authority and capability to run the company? Weak answers can affect valuation, payment terms and the likelihood of completion, whatever the tax calendar says.
The useful response to this Budget is to commission a personal tax calculation and test it against credible sale options. That may support an earlier transaction. It may justify further preparation, or a closer look at Founders’ Relief. The answer will depend on the shareholder as much as the company.
At TheNonExec, we help founders understand those commercial options and prepare for the scrutiny a sale brings. With specialist tax advice alongside that work, owners can choose a timetable grounded in the proceeds they can realistically achieve and the life they want after completion.
Tags: 2026, BADR, budget, Business Asset Disposal Relief, business sale, New Founders’ Relief
