From next April, there’s a 10 percent tax rate for business owners who sell.
But as things stand, you almost certainly won’t get it.
That’s not because you’ve done anything wrong. It’s because the government has drawn a line in the sand and most owner-led businesses sit on the wrong side of it today.
The good news is that the line is about the business you build, not the accountant you hire.
As I’ve been asked a few very similar questions by different business owners since the announcement was made, here are my thoughts:
Is Entrepreneurs’ Relief back?
No, it was made to look that way from all the headlines.
The old Entrepreneurs’ Relief gave owners a 10 percent rate on up to £10 million of lifetime gains, until it was cut back in 2020. The new Founders’ Relief, announced on 28 October, uses the same two numbers from 6 April 2027. But it’s aimed at a much smaller group of owners.
Everyone else relies on Business Asset Disposal Relief and that’s just been halved. From next April it covers £500,000 of lifetime gains instead of £1 million, at 18 percent rather than 24. The most it can now save you is £30,000.
Would my business qualify for the 10 percent rate?
Here’s what the government is proposing. You need to have owned at least a quarter of the company from the day it started trading and held your shares for five years.
In the year before you sell, the business needs at least £10 million of turnover and 15 full-time employees. Directors, contractors and agency staff don’t count, which matters if your trade runs on subcontractors.
Then it has to pass two of three tests. Turnover growing 25 percent a year for three years, starting from at least £10 million. Headcount growing at the same rate, starting from at least 15. Or £1.5 million of R&D spending, with R&D relief claimed on it.
Growing at 25 percent for three years takes a £10 million business to about £19.5 million. HMRC’s own estimate is that around 400 businesses a year will qualify.
The rules are out for consultation until 30 November, so the detail could still change.
If I grow by acquisition, does that count?
This is the question I’d most want answered! The honest answer is that nobody knows yet.
The proposal allows some of the conditions to be met through the holding company of a trading group. But it doesn’t explain how the turnover, headcount and growth tests would work for a group. It also requires the business to still be carrying on the trade it started with, and the government is considering rules against restructuring done just to qualify.
So nobody should buy a business to chase a tax rate - but here’s what I believe matters more..
A few weeks ago I wrote that UK businesses making around £200,000 of profit were selling for about 3.6 times earnings, while businesses making £10 million were selling for about 8.2 times. A bigger business doesn’t just pay a lower rate on its gain. It creates a bigger gain in the first place.
Whether or not “bought growth” ends up counting, a group built well sells on a different multiple. That difference usually dwarfs anything the tax rate can do.
Should I sell before April to keep the old relief?
Only if you were going to sell anyway.
Completing before 6 April 2027 keeps the £1 million limit, which is worth up to £30,000 more than waiting. That’s real money, but it’s a poor reason to sell a business. A rushed deal can easily cost you more than that in price or terms.
And if your business could qualify for Founders’ Relief after April, waiting might be worth far more.
What decides how much I actually walk away with?
I prefer to split things into two lists.
What you don’t control: the tax rates, the reliefs, the small print still being written and whatever the next Budget does. As I’ve said before, the government can change the rules faster than you can change your business.
What you do control: how big and how attractive the business is to investors and buyers, whether you grow it organically or by acquisition - and how a sale is structured when the time comes.
Most owners spend their energy on the first list, but the second one is where the value is.
Founders’ Relief is one route to a lower tax bill and it’s a narrow one. There are other legitimate ways to minimise what you pay, but they depend on how your business and your personal affairs are set up. That’s a conversation rather than a newsletter and it’s one we regularly have with owners alongside our specialist tax advisers.
In the last week, I’ve spoken with two owners running £6-7 million businesses. I told both of them not to spend this month thinking about the tax. The first step is to work out what it would take to become a £15 million group - and then whether they’d get there faster by buying other companies or by hiring more people. The tax answer usually follows from that.
The 10 percent rate sits on the far side of a line most owners haven’t crossed yet. The government decides the rate. Which side of the line you’re on is up to you.
All the best,
Gavin
P.S. If the gap between where your business is today and that £10 million line feels like a plan you haven’t written yet, that’s exactly what the 90-Day Sprint is for. Find out how the 90-Day Sprint works.
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Founders’ Relief and Business Asset Disposal Relief details from HM Treasury’s CGT Founders’ Relief technical consultation and HMRC’s policy paper, October 2026. It is proposed and under consultation until 30 November 2026. Multiples from a half-year survey of 102 UK & Ireland advisory firms, published August 2026. This is general information, not tax advice.
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