The Budget on 28 October 2026 cut the lifetime limit for Business Asset Disposal Relief from £1,000,000 to £500,000, for sales from 6 April 2027. The 18% rate stays. On a gain of more than £1,000,000, it can add up to £30,000 to the tax. Put in your own gain and sale date to see the difference.

Luke Redding, Partner

28 October 2026, 5 minute read

Tax

What the Budget does to the tax on selling your business

In short

The lifetime limit for Business Asset Disposal Relief falls from £1,000,000 to £500,000 for disposals made from 6 April 2027. The rate stays at 18%.
Gains above the new limit are taxed at the main Capital Gains Tax rates. Because the gain that gets the relief uses up your basic rate band first, in practice that means 24%.
The most it adds for one person is £30,000: the £500,000 between the two limits taxed at 24% instead of 18%, on a gain of more than £1,000,000.
The government says three quarters of people who claim the relief will still get it on their whole gain.
A new Founders' Relief at 10% on up to £10,000,000 of gains also starts on 6 April 2027, but only for founders and early investors in high-growth, innovative companies that meet tests still being consulted on.

Business Asset Disposal Relief taxes the gain on selling a trading business at 18%, up to a lifetime limit. In the Budget on 28 October 2026, the government cut that limit from £1,000,000 to £500,000 for disposals made from 6 April 2027. The rate doesn't change, and nor do the main rates of Capital Gains Tax.

The calculator below works out the tax on your gain under today's rules and under the new limit, and says which applies on the date you expect to sell.

Your sale, before and after the Budget

The lifetime limit for Business Asset Disposal Relief falls from £1,000,000 to £500,000 for sales on or after 6 April 2027. The rate stays at 18%, and gains above the new limit are taxed at 18% or 24%. The Budget says it applies to disposals made from 6 April 2027.

Your gain on the sale

The price for your shares, less the costs of selling and what you paid for them. Our business sale tax calculator works it out if you're not sure.

When you expect to sell

A sale usually counts as made when the contract becomes unconditional, but HMRC says special rules will apply to contracts entered into before 6 April 2027 that haven't completed by then, so don't rely on the exchange date alone. Leave it blank to use today.

Do you qualify for Business Asset Disposal Relief?

Usually yes if, for the two years before the sale, you've held at least 5% of the shares and votes and been a director or employee of a trading company. Who qualifies

YesNo

How much of your lifetime limit you've used

Gains you've claimed the relief on before, including as Entrepreneurs' Relief. For most owners selling for the first time, it's nothing.

Your other income in the tax year of the sale

Salary, dividends, pensions and rent, before tax. It decides how much of the gain is taxed at the lower rate.

Put in your gain to see the tax before and after the Budget.

A rough guide, not tax advice. It uses one person's gain, the tax-free allowance and the basic rate band for the tax year of the rules shown, and ignores losses and other gains. Talk to your accountant before you set a sale date.

What changes on 6 April 2027

Today, an owner who qualifies pays 18% on up to £1,000,000 of gains over their lifetime. From 6 April 2027, the 18% rate covers the first £500,000. The policy costing published with the Budget says gains above the new limit are taxed at the headline rates of Capital Gains Tax: 24% for a higher rate taxpayer, and 18% on any part that fits in an unused basic rate band.

For one person, the most it adds is £30,000: the £500,000 between the two limits, taxed at 24% instead of 18%. That's the figure for a gain of more than £1,000,000, and a little less for a gain right at it, because the £3,000 tax-free allowance moves onto gain taxed at 24%. On a £2,000,000 gain, an owner who qualifies and has other income of £60,000 would pay about £419,280 selling before 6 April 2027 and £449,280 selling after it.

If your gain is £500,000 or less, and you haven't claimed the relief before, nothing changes. The government says this covers three quarters of the people who claim it. Our study of who the new limit hits uses HMRC's figures on who claims the relief. A husband, wife or civil partner who owns shares and qualifies in their own right has their own limit.

Exchange, completion and the 6 April 2027 start

For Capital Gains Tax, a sale under an unconditional contract happens on the day the contract is made, not the day the money arrives. If a contract has conditions, such as a lender's or a regulator's consent, the sale happens when the last condition is met. But HMRC's overview of the Budget legislation says special rules will apply to contracts entered into before 6 April 2027 that haven't completed by then, and to some share reorganisations and exchanges of securities. The detail comes with the Finance Bill, so don't rely on the exchange date alone.

A new Founders' Relief, for a narrower group

Also from 6 April 2027, a new Founders' Relief taxes gains at 10% on up to £10,000,000 over a lifetime. It's aimed at founders and early investors in high-growth, innovative companies. The policy costing says a founder must have held at least 25% of the company when it started trading. The government's response to its call for evidence says the company must also meet minimum turnover and employment levels and two of three tests on growth in turnover, growth in headcount and research and development.

HM Treasury's technical consultation sets out the proposed numbers. The company would need turnover of at least £10,000,000 and at least 15 full-time employees in its last accounting period before the sale. It would also need two of these: average growth of 25% a year in turnover over three years, the same growth in headcount, or at least £1,500,000 of research and development claimed for in the three years before the sale. The founder would need to have held the shares for at least five years. Most owner-run businesses won't meet these tests. The consultation closes on 30 November 2026, so the details could still change.

The two reliefs run alongside each other, but any Business Asset Disposal Relief or Investors' Relief claimed from 6 April 2027 reduces the £10,000,000 Founders' Relief limit.

Other Budget changes that touch a sale

From April 2028, the rules on how a company's payments to its shareholders are taxed will be modernised, including the relief that lets a company buy back an owner's shares and have it taxed as a capital gain. HM Treasury's factsheet says ordinary sales of shares to another person or business stay under Capital Gains Tax, and draft rules are due in 2027. Our list of every Budget change for business owners has the rest, each with its start date.

What it means if you're thinking of selling

A tax change is one reason among many to choose a sale date, and a sale can take six months or more to agree and complete. Our business sale tax calculator works through the whole sale under today's rules, including a husband, wife or civil partner's share, and our guide to Business Asset Disposal Relief covers who qualifies. This is general guidance, not advice: talk to your accountant before you set a sale date.

Questions owners ask

When does the new Business Asset Disposal Relief limit start?

For disposals made from 6 April 2027, according to the Budget document. It will be legislated in Finance Bill 2026-27. Disposals made before then keep the £1,000,000 limit, subject to any rules HMRC sets for sales agreed before that date and completed after it.

Did the Budget change the rate of Business Asset Disposal Relief?

No. Qualifying gains up to the limit are still taxed at 18%, the rate that applies to sales from 6 April 2026. Only the lifetime limit changes.

Did the Budget change Capital Gains Tax rates?

No. The main rates stay at 18% and 24%. HM Treasury's factsheet on company distributions, published with the Budget, says there are no changes to dividend tax or Capital Gains Tax rates.

What if I've already claimed the relief before?

Gains you've claimed it on before, including as Entrepreneurs' Relief, count towards the lifetime limit. From 6 April 2027 that limit is £500,000, so an owner who has already used £500,000 or more would have none left for a later sale.

What is Founders' Relief?

A new relief from 6 April 2027: a 10% rate of Capital Gains Tax on up to £10,000,000 of lifetime gains for founders and early investors in high-growth, innovative companies. Under the proposals, a founder must have held at least 25% of the company at the start of trading and kept the shares for five years, and the company needs turnover of at least £10,000,000 and at least 15 full-time employees in its last accounting period before the sale, plus two of three tests on growth in turnover, growth in headcount and research and development. It runs alongside Business Asset Disposal Relief, but any Business Asset Disposal Relief or Investors' Relief claimed from 6 April 2027 reduces the £10,000,000 limit. The consultation closes on 30 November 2026.

Does the date of exchange or completion count?

For Capital Gains Tax, a sale under an unconditional contract usually counts as made on the day the contract is made, not at completion. But HMRC's overview of the Budget legislation says special rules will apply to contracts entered into before 6 April 2027 that haven't completed by then, and to some share reorganisations and exchanges of securities. The detail comes with the Finance Bill, so don't rely on the exchange date alone: check with your accountant how your sale would be treated.

Sources

This is general information about how things work in the UK, not financial, legal or tax advice. Rules and rates change, and every business is different, so talk to your accountant or solicitor before you act on it. How we write our guides.

From Luke ReddingBuilt Reddico to seven-figure annual profit and sold it in 2021

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