Business asset disposal relief halves from April 2027

A worked example

Illustration using a made-up company. An owner has agreed to sell their trading business for a qualifying gain of £900,000, and is a higher-rate taxpayer. The deal could complete before or after the new limit takes effect.

Tax on a £900,000 qualifying gain

Made-up figures, 18% business asset disposal relief rate throughout

Completing under the current £1 million limit£162,000

£500,000 at 18%, £400,000 at the standard 24% rate£186,000

Difference, same gain, later completion date£24,000

The qualifying gain is the same, the owner is the same, and the business is the same. The only variable is which side of April 2027 the sale completes on. Capital gains tax is assessed on the completion date; heads of terms, exchange, or an earlier agreement in principle do not set the rate. Below £500,000 of qualifying gain, under current rules, none of this difference arises at all.

What runs alongside this change

The rate itself is unchanged

The 18% business asset disposal relief rate on qualifying gains from 6 April 2026 was not touched in this Budget. Only the lifetime limit on how much gain can be taxed at that rate is falling, from £1 million to £500,000 (gov.uk, Business Asset Disposal Relief).

Headline capital gains tax rates stay put

The standard capital gains tax rates of 18% and 24% were left unchanged in this Budget despite speculation before it (Professional Adviser, 28 October 2026). Gains above the relief's lifetime limit are taxed at those rates.

Founder's Relief is new and undefined

The same Budget introduced Founder's Relief, a 10% rate on lifetime gains up to £10 million for founders of Britain's most successful companies. The Budget announcement did not set out qualifying conditions, and no draft legislation has been published.

Where this shows up first

A firm sees a business sale long before any adviser does: heads of terms shared for a tax clearance check, a completion date discussed for the accounts cut-off, a qualifying gain estimated for a client asking what they will keep. Whether that gain sits above or below £500,000, and which side of April 2027 completion falls on, is arithmetic on information the firm already holds.

£500,000

new lifetime limit on business asset disposal relief, from April 2027

18%

current rate on qualifying gains within the limit, unchanged by this Budget

£24,000

extra tax in the worked example above on a £900,000 gain completing after the limit falls

Professional Adviser, 28 October 2026; gov.uk, Business Asset Disposal Relief.

What is accountancy work and what is advice

Accountancy work

Calculating the qualifying gain, checking the two-year ownership test, and showing a client where their gain sits against the £500,000 line and either side of the April 2027 completion date.

Regulated advice

Deciding what to do with the proceeds, whether timing completion is right for the client's wider circumstances, and what Founder's Relief might mean once its rules are published. That is for the Equity & General financial adviser.

An accountancy practice without FCA permissions cannot give that advice. In an Altro partnership, the introduction is made through the portal in the firm's name, the client meets the Equity & General Account Manager first, and the financial adviser gives the advice. Your firm sees every introduction tracked from the first call to advice implemented. What happens to the proceeds once a sale completes is covered in financial planning before a business sale and how an introduction runs.

The FCA's Financial Lives 2024 survey found that 8.6% of UK adults had taken regulated financial advice in the previous twelve months, and 13% of the self-employed. A business owner mid-sale is seen by their accountant at exactly the point that figure matters most.

Two things to do this week

Pull the completion timeline for any client mid-sale. Where heads of terms are signed or a sale is in legal process, check the expected completion date against April 2027, and whether the qualifying gain is likely to be above £500,000.
Note the gain estimate in the file. Where a figure exists, record it alongside the completion date, and ask whether the client would like a conversation about the timing and what happens to the proceeds.

Common questions

What exactly changed to business asset disposal relief?

Business asset disposal relief lets a business owner pay a reduced rate of capital gains tax, currently 18%, on qualifying gains when they sell, up to a lifetime limit. That limit has stood at £1 million since 6 April 2025. In the Budget on 28 October 2026, Chancellor John Healey announced it will fall to £500,000 from April 2027 (Professional Adviser, 28 October 2026). Healey said the change means no change for three in four claimants, which tells you the limit mainly bites on larger disposals, not that it is a minor adjustment for anyone selling a business worth more than £500,000 in qualifying gains.

Does it make a difference whether a sale completes before or after April 2027?

Yes, for any qualifying gain above £500,000. A gain of £900,000 taxed under the current £1 million limit sits entirely within the relief, at 18%. The same gain taxed under the £500,000 limit splits: £500,000 at 18%, and the remaining £400,000 at the standard capital gains tax rate of 24% for a higher-rate taxpayer (gov.uk, Capital Gains Tax rates). The completion date decides which rule applies. Heads of terms or an earlier agreement in principle do not. A deal that could complete on either side of April 2027 has a real figure attached to the timing.

What is the new Founder's Relief, and does it help instead?

Alongside the cut to business asset disposal relief, Healey announced a new relief called Founder's Relief, charging capital gains tax at 10% on lifetime gains up to £10 million for founders of Britain's most successful companies (Professional Adviser, 28 October 2026). The Budget announcement did not set out which companies or founders will qualify, and no draft legislation has been published. Until HMRC guidance or a Finance Bill clause defines the qualifying conditions, a firm cannot tell a client whether they would meet them, and nobody reporting on the Budget has been able to say either.

Is this the same change as the £2.5 million cap on business property relief?

No, and the two are easy to run together because both involve a business and a tax threshold. Business property relief is an inheritance tax relief that applies when business or agricultural property passes on death or into certain trusts, capped at £2.5 million from 6 April 2026, covered in the £2.5 million cap on business and agricultural property relief. Business asset disposal relief is a capital gains tax relief that applies when an owner sells during their lifetime, and its lifetime limit is falling from £1 million to £500,000 from April 2027. A client could be affected by one, the other, or both, depending on whether they are selling the business now or holding it until death.