Chancellor John Healey used his first Budget on Wednesday to halve the tax break Britain gives business owners when they sell up. From 6 April 2027, the lifetime limit for Business Asset Disposal Relief — the relief that taxes qualifying gains on a business sale at 18 percent instead of the main capital gains rates of up to 24 percent — falls from £1 million of gains to £500,000. The 18 percent rate itself is unchanged, but the maximum tax saving the relief can ever deliver drops from £60,000 to £30,000, and an owner selling with a £1 million qualifying gain will pay around £30,000 more in tax. Healey told the Commons the cut means no change for three in four claimants, whose gains fall under the new limit.
Against that cut, the Chancellor created a new Founders' Relief aimed at the builders of high-growth, innovative companies: qualifying sales of shares on or after 6 April 2027 will be taxed at 10 percent on gains of up to £10 million per person — a saving of up to £1.4 million for a founder who qualifies in full. "We want the best entrepreneurs to start, scale and stay in Britain," Healey said. The detailed conditions are proposals only at this stage — including holding at least 25 percent of the company from when its trade began, holding the shares for five years and being UK-resident — and a technical consultation on them runs to 30 November, with legislation to follow.
The Budget also raised the tax on income from property and savings by a further two points from April 2027, on top of the two-point rise already announced at the previous Budget. From that date, savings and rental income outside tax-free wrappers will be taxed at 24 percent for basic-rate taxpayers, 44 percent at the higher rate and 49 percent at the additional rate, while the personal savings allowances stay as they are and the cash ISA limit stays at £20,000 after a proposed cut to £12,000 was scrapped. The Treasury's stated aim is to narrow the gap between the tax on earnings and the tax on income from assets, which carries no National Insurance.
Reaction from advisers was split. Osborne Clarke's Michael Carter called it "something of a mixed message" for entrepreneurs, while Johnston Carmichael's Alex Docherty said the 10 percent founders' rate tells anyone building the next big British business that the UK wants them to do it here — but warned the Budget creates two classes of founder, with the family firms and long-standing businesses that form the backbone of the economy largely outside the new relief and squarely hit by the disposal-relief cut. PwC's Will Dowsett called the proposed eligibility tests "onerous" and said repeated changes deny entrepreneurs the stable, predictable tax system they value. For the Conservatives, Kemi Badenoch said the Budget was "not good enough, not strong enough, not bold enough," and that the tax burden would reach the highest in the country's history.
For citizens, the changes land on three groups. A business owner who has spent a lifetime building a firm and sells with a £1 million gain pays about £30,000 more in tax once the disposal-relief cut bites — which is why advisers say anyone weighing a sale should review the timing before April 2027. A founder of a genuinely high-growth company, by contrast, could keep up to £1.4 million more of a big exit. And from April 2027, landlords and anyone earning interest outside an ISA will be taxed at 24, 44 or 49 percent on that income — though the unchanged savings allowances mean the first £1,000 of interest for basic-rate taxpayers, and £500 for higher-rate taxpayers, still stays tax-free.
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