Budget 2026: What does the Budget mean for business owners looking to sell their companies?

On the downside, the limit for Business Asset Disposal Relief (BADR) has been halved, whereby it will now only apply to the first £500,000 of lifetime gains on sales of business assets, rather than £1 million. 

The value of BADR was already reduced in April 2026, when the effective rate increased from 14% to 18% (compared to a standard Capital Gains Tax rate of 24%).  However, this further dilution of the relief will not be welcomed by business owners. 

The slashed BADR limit will take effect from 5 April 2027, so we can expect a few transaction timetables accelerating over the next six months to get sales through before the change comes into effect. 

On the upside, the Chancellor is introducing a new “Founders’ Relief”, which sounds very similar to BADR, but  is targeted at the original founders of businesses, rather than anyone who happens to hold a qualifying number of shares in a qualifying trading company at the time of a sale.  

The Founders’ Relief will be a 10% CGT rate on lifetime gains of up to £10m, which was the original limit when BADR was introduced. This Founders’ Relief will benefit entrepreneurs when they come to sell their companies, but I can see some difficulty in implementing it. When we act for shareholders selling their companies, they are often not just founding shareholders, but also others who joined them in the journey, some of them joining in order to take the company to the next level and ready for sale. Why should some of them get relief, but not others?  I note the proposal is subject to consultation (only until 30 November 2026!), so it will be interesting to see how they tackle this dilemma. 

Finally, there are some useful changes to Enterprise Management Incentive and Company Share Option Plan share scheme rules, although these tinker at the edges, rather than constitute particularly significant amendments.

If you are a business owner looking for more information on selling your business you can contact Nick or one of the team on 0208 290 0440.