Founders’ Relief: 10% CGT for Founders From April 2027
Founders’ Relief is a new Capital Gains Tax relief announced in Budget 2026 (28 October 2026). From 6 April 2027, founders and early investors who qualify will pay 10% on gains from selling shares in a high-growth UK company, on up to £10 million of gains over their lifetime. The conditions are strict - HMRC expects about 600 people a year to qualify - and the government is consulting on the details until 30 November 2026.
Assumes the sale qualifies and there are no losses or other gains in the year. The relieved slice is assumed to use your basic rate band first and the £3,000 annual exempt amount to come off the highest-taxed gains first, as BADR works today - the legislation isn't published yet.
What is confirmed so far
- Rate: 10% on qualifying gains on shares or securities (Budget 2026, Annex A).
- Limit: £10 million of gains per person over a lifetime. Any Business Asset Disposal Relief or Investors’ Relief claimed from 6 April 2027 reduces it.
- Start: qualifying disposals on or after 6 April 2027, once amendments to Finance Bill 2026-27 are passed.
- Claim: through your Self Assessment return, with a supplementary form.
- Still open: the practical rules - the technical consultation closes on 30 November 2026.
Who qualifies: the proposed conditions
HMRC’s tax information and impact note sets out the design being consulted on. You must:
- have held 25% of the company’s ordinary share capital when it started trading (or started preparing to trade);
- have held the shares for at least 5 tax years before the sale; and
- have been UK resident under the Statutory Residence Test for at least 5 continuous tax years before the sale.
The company must be within UK Corporation Tax, have a substantial UK presence for the 5 accounting periods before the sale, be a trading company (or the holding company of a trading group) still carrying on the trade it was set up for, and have had at least £10 million of turnover and 15 full-time-equivalent employees in the accounting period before the sale. It must also meet two of three growth tests within the 10 years before the sale: average turnover growth of 25% a year over 3 consecutive periods, average headcount growth of 25% a year over 3 consecutive periods, or at least £1.5 million of qualifying R&D spending with R&D relief claimed in the 3 years before the sale. Trades excluded from the Enterprise Investment Scheme - such as dealing in land, financial services and property development - don’t qualify. Listed and unlisted companies can both qualify.
That is a high bar: HMRC estimates about 600 eligible individuals a year. Most owner-managed business sales will still rely on Business Asset Disposal Relief at 18%.
Founders’ Relief vs BADR: what it is worth
Higher-rate taxpayer (£60,000 of other income), no earlier claims, all conditions met:
| Gain | Founders’ Relief (10%) | BADR from 6 Apr 2027 | BADR by 5 Apr 2027 | No relief |
|---|---|---|---|---|
| £1,000,000 | £99,700 | £209,280 | £179,460 | £239,280 |
| £2,000,000 | £199,700 | £449,280 | £419,280 | £479,280 |
| £5,000,000 | £499,700 | £1,169,280 | £1,139,280 | £1,199,280 |
| £10,000,000 | £999,700 | £2,369,280 | £2,339,280 | £2,399,280 |
| £15,000,000 | £2,199,280 | £3,569,280 | £3,539,280 | £3,599,280 |
On a £5,000,000 gain, Founders’ Relief would cost £499,700, against £1,169,280 with BADR after the limit falls and £1,139,280 with BADR on a sale completing by 5 April 2027. Above £10 million the normal 24% applies to the excess: a £15,000,000 gain would cost £2,199,280.
Timing around 6 April 2027
A sale that completes by 5 April 2027 can use only Business Asset Disposal Relief, at 18% on whatever is left of your £1 million lifetime limit. From 6 April 2027 that limit is £500,000, and Founders’ Relief at 10% is available only if every condition is met. Contracts signed before 6 April 2027 that complete afterwards have special rules for the BADR limit. Both changes still have to pass in Finance Bill 2026-27, and the Founders’ Relief rules may change after the consultation - so treat these numbers as a guide, not a plan.
Leaving the UK?
One of the proposed conditions is at least 5 continuous tax years of UK residence before the sale, under the Statutory Residence Test. How capital gains are taxed when you move abroad is covered in our guide to capital gains tax when you leave the UK.
Frequently asked questions
What is Founders' Relief?
A new Capital Gains Tax relief announced in Budget 2026 (28 October 2026). From 6 April 2027 it charges 10% on qualifying gains on shares, up to a £10 million lifetime limit, for founders and early investors in high-growth UK companies who meet strict conditions.
When does Founders' Relief start?
For qualifying disposals on or after 6 April 2027. It has to be legislated first, through amendments to Finance Bill 2026-27, and the government is consulting on how it will work until 30 November 2026.
What are the rate and the lifetime limit?
10% on up to £10 million of qualifying gains per person. Any Business Asset Disposal Relief or Investors' Relief claimed from 6 April 2027 reduces the £10 million available.
Who qualifies?
Under the proposals, you must have held 25% of the ordinary shares when the company started trading, held your shares for at least 5 tax years and been UK resident for at least 5 continuous tax years before the sale. The company needs at least £10 million of turnover and 15 full-time-equivalent employees in the period before the sale, a substantial UK presence, and two of three growth tests. HMRC expects about 600 people a year to qualify.
Does it replace Business Asset Disposal Relief?
No. Business Asset Disposal Relief carries on at 18%, but its lifetime limit falls from £1 million to £500,000 for disposals on or after 6 April 2027.
Can a listed company qualify?
Yes. HMRC's note says the company may be listed or unlisted. Companies in the trades excluded from the Enterprise Investment Scheme, such as dealing in land, financial services and property development, will not qualify.
Related
Based on the Budget 2026 documents and HMRC’s tax information and impact note (28 October 2026). Proposals, not law yet; the qualifying rules are under consultation. Not tax advice: a sale of this size needs professional advice.
Sources
- Budget 2026 overview of tax legislation and rates, 1.32-1.33 (Founders' Relief; BADR lifetime limit to £500,000 from 6 April 2027): https://www.gov.uk/government/publications/budget-2026-overview-of-tax-legislation-and-rates-ootlar/budget-2026-overview-of-tax-legislation-and-rates-ootlar
- Budget 2026 Annex A: rates and allowances: https://www.gov.uk/government/publications/budget-2026-overview-of-tax-legislation-and-rates-ootlar/annex-a-rates-and-allowances
- HMRC: Capital Gains Tax - introduction of a new founders relief (conditions, ~600 eligible individuals a year): https://www.gov.uk/government/publications/capital-gains-tax-introduction-of-a-founder-relief/capital-gains-tax-introduction-of-a-new-founders-relief
- HMRC: reduction in the Business Asset Disposal Relief lifetime limit: https://www.gov.uk/government/publications/capital-gains-tax-reduction-in-the-business-asset-disposal-relief-lifetime-limit
- Business Asset Disposal Relief: https://www.gov.uk/business-asset-disposal-relief
- HMRC Capital Gains Manual CG21000: relieved gains use the basic rate band first: https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg21000