Budget 2026: What the BADR and Founders’ Relief Changes Mean for Business Exit Planning

What did Budget 2026 change for business owners selling shares?

Two measures stand out for owners planning an exit. First, the government is reducing the lifetime limit for gains eligible for Business Asset Disposal Relief from £1m to £500,000 from April 2027.(HM Treasury) The 18% BADR rate is unchanged. Second, it announced a new Founders' Relief offering a 10% rate on up to £10m of lifetime gains for qualifying founders of high-growth, innovative companies from 6 April 2027.(HM Treasury)

Why is the BADR change relevant to so many owners?

BADR is the relief most established owner-managers rely on when they sell shares in a trading company they work in. HMRC estimates around 51,000 claimants, of whom about 13,000 are expected to be affected by the lower limit, and notes that the affected population is concentrated among individuals aged 45 to 74.(HMRC) That is precisely the group planning retirement or succession over the next few years. Our Business Asset Disposal Relief guide covers eligibility, an illustrative calculation, the proposed anti-forestalling rules and why Heads of Terms do not by themselves fix the tax treatment.

Who is Founders' Relief actually for?

As proposed, Founders' Relief requires the individual to have held 25% of the ordinary share capital when the trade began, held the shares for 5 tax years and been UK resident for 5 continuous tax years. The company needs at least £10m turnover and 15 qualifying full-time equivalent employees, and must meet two of three growth or R&D tests.(HMRC) HMRC expects around 600 eligible individuals a year. It may be valuable for that group, but it is not a general rate for founders. See the Founders' Relief guide for each proposed condition and how claims interact with BADR headroom.

Should owners sell before April 2027?

Not because of tax alone. The BADR saving from selling earlier is capped at 6% of the £500,000 of limit being removed, and proposed anti-forestalling rules target contracts timed to secure the old limit.(HMRC) A rushed, under-prepared sale can easily cost more through a lower price, more deferred consideration or harder due diligence. For an owner already well advanced in a sale, timing is a legitimate question for their tax adviser and solicitor. For most owners, the better response is to prepare properly for whenever the right exit is.

What should owners planning an exit in 2027 to 2029 do now?

Treat the new limits as a planning assumption and put the effort into the factors that change what you receive:

• Value. Get a realistic view of what the business is worth and what you would net after structure and tax. See valuation and value planning.
• Readiness. Records, contracts and management depth that will stand up to buyer scrutiny. See preparing a business for sale.
• Owner dependency. The single factor that most often limits price and terms.
• Timetable. Preparation, process and handover take longer than most owners expect. See the business exit timeline.
• Route. A trade sale, management buyout, employee ownership trust, family succession or partial sale each have different tax and commercial profiles. See exit options.
• Retirement. Connect expected net proceeds with what you need personally. See business retirement planning.

Where does tax advice fit?

Specialist tax advice should come before binding steps such as restructuring, share reorganisations or signing contracts, and should be refreshed once Finance Bill 2026-27 is published and the Founders' Relief consultation concludes. ExitPlanning.co.uk does not give tax advice; we help with the commercial preparation and timetable alongside your accountant and tax adviser.