Budget 2026 reaction: What the Autumn Budget means for founders and growing businesses?

By Julie Book

29 Oct 2026 6 min read

A 10% rate of Capital Gains Tax (CGT) on up to £10 million of lifetime gains is an eye-catching headline which many had not predicted. But for most founders, the key question is a simple one: will it apply to me?

Under the banner of “Start. Scale. Stay”, the Autumn Budget 2026 includes a package of measures aimed at helping British-founded businesses start up, scale up, and stay in the UK, as set out in the Government’s accompanying prospectus. Alongside the new Founders’ Relief, the Budget reduces the Business Asset Disposal Relief (BADR) lifetime limit, and introduces new allowances and funding available to founders.

Despite pre-Budget speculation, no changes were made to headline CGT rates, which remain at 18% and 24%. What has changed is the shape of the reliefs available on exit, which could be more generous for certain high-growth founders, but less generous for many other business owners due to the BADR reduction.

1. Founders’ Relief

What has been announced?

From 6 April 2027, eligible founders (and, potentially, early investors) of high-growth, innovative UK companies will pay CGT at 10% on up to £10 million of lifetime gains.

Compared with the 24% main CGT rate, the maximum benefit will be £1.4 million per individual.

Who will qualify?

The proposed conditions are set out in a Technical Consultation, which closes on 30 November 2026. These conditions are demanding and complex.

The conditions below reflect the current proposal.

To be a “Founder” an individual must have:	A company must:	Growth and innovation criteria: (2 out of 3 to be satisfied)
Owned at least 25% of the business at the outset	Be trading (or the holding company of a trading group)	Growth in revenue of at least 25% over a three-year period
Held their shares for at least 5 years	Be subject to UK corporation tax (so UK tax resident or operating via a permanent establishment in the UK)	Growth in headcount of at least 25% over a three-year period
Been UK tax resident for at least 5 tax years	Have turnover of at least £10m and at least 15 full-time employees	Incurred at least £1.5m of qualifying R&D expenditure

What does this mean for founders?

For founders who qualify, the relief is significant. However, there is concern that relatively few businesses are likely to meet every condition. Alongside this, the complexity of the draft conditions means it will be very difficult for founders to easily assess whether they will qualify or not.

From a practical perspective:

The “same trade” requirement may be difficult for start-ups that have pivoted away from their original idea.
The 25% initial shareholding test means that management teams, later joiners, and employees whose value is held through EMI options are unlikely to benefit. Different shareholders on the same sale may therefore be taxed very differently.
Founders do not appear to need to work in the business, so early investors holding 25% from the outset may also qualify.

The consultation is an opportunity for founders and their advisers to comment on the design of the relief before it is legislated in Finance Bill 2026-27. Therefore the conditions may change before being implemented from 6 April 2027.

2. Business Asset Disposal Relief

What has been announced?

For disposals on or after 6 April 2027, the BADR lifetime limit will reduce from £1 million to £500,000. The 18% BADR rate is unchanged, with gains above the limit taxed at 24%. The maximum saving from BADR therefore falls from £60,000 to £30,000.

BADR remains more accessible than Founders’ Relief, requiring a much smaller shareholding than the 25% needed for Founders’ Relief and a two-year qualifying period (rather than five years).

The Treasury has said that around three in four BADR claimants will be unaffected by the lower limit. Even so, for most owner-managed businesses, BADR is likely to remain the relief that matters on exit.

What does this mean for founders?

For founders planning an exit, a founder who qualifies for BADR but not Founders’ Relief could pay up to £30,000 more tax if a disposal takes place on or after 6 April 2027. Therefore, for founders who may be considering an exit in 2027, points to consider include:

whether a sale, or any part of it, can sensibly complete before 6 April 2027; and/or
whether, for a founder who may qualify for Founders’ Relief, it would be better to wait.

Given the complexity of these reliefs, our advice remains the same – speak to your advisers early and discuss the options.

3. New allowances for founders

The Budget has introduced a number of new allowances aimed at start-ups including the Pilot Young Entrepreneurs Allowance. This pilot scheme will cover a year of living costs for young founders. It is aimed at one of the most practical barriers to starting a business: being able to support yourself while the business is not yet generating income.

As a pilot, the scheme is likely to be limited in scale at first. Key details have yet to be published, including the age range and eligibility criteria, the level of support, how applications will be assessed, where the pilot will run and whether it will be extended.

4. New funding available to founders

British Business Bank

The British Business Bank’s financial capacity will receive a £5 billion uplift to increase access to finance, as part of wider funding commitments for the British Business Bank and the National Wealth Fund. As the British Business Bank generally works through banks, funds, and other lenders rather than lending directly, growing businesses are most likely to see the effect through the products offered by those providers.

Scale-up support for women founders

A new scale-up programme for women founders is being launched, with the British Business Bank doubling its commitments to women-led businesses and funds to £200 million. Alongside this, the Government is introducing new voluntary Tech Forward and Inclusive Investment Standards.

What does this mean for founders?

Founders preparing for a fundraise may wish to consider whether these programmes are relevant to them and how any new investment would sit with their existing arrangements.

5. Incentives for employees

The Autumn Budget brought some welcome improvements to employee share plans. For full details please see our Article “Budget 2026 reaction: the new £370,000 EMI + EMI2 option package”.

So what does all this mean for founders?

The absence of CGT rate increases gives founders and investors more certainty on CGT for now. However, with Founders’ Relief and the reduced BADR limit both starting on 6 April 2027, the timing and structuring of transactions over the coming months will need careful thought so if you are a founder considering an exit, you should seek tax and legal advice early to understand all your options.

At Burges Salmon, we work alongside founders and entrepreneurs to provide commercial and pragmatic advice that reflects the realities of running and scaling a business. Our Founders and Entrepreneurs Hub brings together insights and practical guidance covering the full business lifecycle, from start-up and scale-up through to exit and life afterwards.