What is Founders' Relief?

Founders' Relief is a capital gains tax relief announced at the Budget on 28 October 2026. From 6 April 2027, a founder or early investor who meets its conditions pays 10% on gains from selling shares in the company, up to £10 million in their lifetime. The company must have turnover of at least £10 million, at least 15 full-time staff and a record of fast growth or research and development spending. HMRC estimates about 600 people a year will qualify.

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Your conditions

25% from the start: You held 25% of the company's ordinary share capital when it began the trade it was formed for, or began preparing for it.
Five tax years: You held the shares for at least 5 tax years before you sell.
UK resident: You were UK resident under the statutory residence test for at least 5 continuous tax years before the sale.

The company's conditions

UK presence: Within UK corporation tax, with a substantial UK presence for the 5 accounting periods before the sale.
Trading: A trading company, or the holding company of a trading group, still carrying on the trade it was set up for with no major change.
Size: Turnover of at least £10 million and at least 15 qualifying full-time equivalent employees in the accounting period ending in the year before the sale.
Growth, two of three: Average compound growth in turnover of 25% a year over 3 consecutive accounting periods; the same growth in full-time employees; or at least £1.5 million of qualifying research and development spending with tax relief claimed for periods ending in the 3 years before the sale. The two growth tests must fall within the 10 years before the sale.
Excluded trades: The trades excluded from the Enterprise Investment Scheme, such as dealing in land, financial services and property development.

HMRC tax information and impact note, Capital Gains Tax: introduction of a founder relief, 28 October 2026. Checked 6 November 2026.

How it sits with Business Asset Disposal Relief

Business Asset Disposal Relief and Investors' Relief claimed from 6 April 2027 reduce the £10 million Founders' Relief limit. The relief is claimed in your tax return, with a supplementary form.

On a £5 million gain that qualifies, the tax at 10% is £500,000. At the 24% higher rate it would be £1.2 million.

Where it stands

A technical consultation on how the conditions will work closes on 30 November 2026. The government will then add the relief to Finance Bill 2026-27, so the detail can change before it becomes law.

The company needs turnover of at least £10 million and at least 15 full-time staff before the founder can claim.

Calculators

Tax on selling a business calculator

The tax on the gain from selling your shares, with Business Asset Disposal Relief at 18% up to the £1 million lifetime limit.

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Where this fits

We advise founders on the money from a sale: pensions, investments and the inheritance tax on what is left.

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The advisers for this subject

Sunny Bharj

Independent Financial Adviser

Tony Springer

Independent Financial Adviser

Advising through Equity & General Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority. Check the firm on the FCA register under number 474163.