Autumn Budget 2026: BADR limit halved and new Founders’ Relief announced

Chancellor John Healey’s first Budget, delivered on 28 October 2026, halves the lifetime limit on Business Asset Disposal Relief (BADR), introduces a new 10% Founders’ Relief and raises tax on savings and property income. The headline rates of Income Tax, Corporation Tax, National Insurance and VAT are unchanged.The most important dates are 1 January 2027, when a higher first-year allowance starts, and 6 April 2027, when the BADR, Founders’ Relief and savings and property income changes take effect. The BADR and Founders’ Relief changes will be legislated in Finance Bill 2026-27, and the detailed Founders’ Relief rules are still out for consultation. Until then, everything below is announced policy rather than law.

Business Asset Disposal Relief: the lifetime limit halves to £500,000

For disposals on or after 6 April 2027, the lifetime limit on gains eligible for BADR falls from £1 million to £500,000. The 18% rate is unchanged, so the effect is on the amount of gain that qualifies. With the main Capital Gains Tax rate at 24%, the most BADR can now save over a lifetime is £30,000, half the £60,000 available at the old limit.The Chancellor said three in four BADR claimants will see no change, so the impact falls on owners with larger gains. There are special provisions for contracts entered into before 6 April 2027 that have not completed, and for certain share reorganisations and exchanges of securities not completed by that date. The reduction also has implications for holders of EMI options.Owners who are planning a sale, a succession or a restructure should take advice on timing and on how those transitional rules apply to their own transaction.

Founders’ Relief: a 10% rate on up to £10 million of gains

From 6 April 2027, qualifying founders of, and significant early investors in, high-growth, innovative companies will pay 10% Capital Gains Tax on up to £10 million of lifetime gains from qualifying disposals of shares or securities. Against the 24% main rate, that is a saving of up to £1.4 million per person.The £10 million limit is reduced by any BADR or Investors’ Relief claimed from 6 April 2027, so the two reliefs cannot be stacked. The qualifying conditions proposed in the consultation are set out below.

A technical consultation closes on 30 November 2026, and the legislation is expected in Finance Bill 2026-27. Founders who may qualify can still influence how the conditions are drawn.

• The individual must have held 25% of the company’s ordinary share capital, with matching voting and distribution rights, when the trade (or preparation for it) began. They must also have held the shares for at least five years before disposal and been UK resident for at least five continuous tax years before disposal.

• The company must be in scope of UK Corporation Tax with a substantial UK presence for the five accounting periods before disposal, and be a trading company or the holding company of a trading group. It must have continued the trade it was set up for, had turnover of at least £10 million in the accounting period before disposal, and employed at least 15 qualifying full-time employees in that period.

• Growth and innovation: the company must pass two of three tests. Two measure average annual compound growth of at least 25% over three consecutive accounting periods within the ten years before disposal, one in turnover (from a base of at least £10 million) and one in qualifying full-time employees (from a base of at least 15). The third requires at least £1.5 million of qualifying R&D spend, on which R&D tax relief was claimed, in the three years before disposal.

Claims will be made in the individual’s Self Assessment return. If HMRC later challenges a company’s R&D tax relief claim and a condition the individual relied on is not met, they could lose the relief and owe the additional tax with interest.

Savings and property income: rates rise to 24%, 44% and 49%

From 6 April 2027, Income Tax on savings and property income will be 24% for basic-rate, 44% for higher-rate and 49% for additional-rate taxpayers. That is two percentage points more than the 22%, 42% and 47% announced at Budget 2025, and four points above today’s 20%, 40% and 45%. The savings rates apply across the UK. The property income rates apply in England, Wales and Northern Ireland. Rates on earnings, whether from employment or self-employment, are unchanged. Landlords who hold property personally, and savers with substantial interest outside tax-efficient accounts, should review their position before April 2027.

Capital allowances: a higher first-year allowance and a lower writing-down allowance

The main-rate first-year allowance rises from 40% to 50% for expenditure incurred on or after 1 January 2027. It applies to qualifying investment that does not attract full expensing, so the timing of spend matters.The main-rate writing-down allowance falls from 14% to 12%, from 1 April 2027 for Corporation Tax and 6 April 2027 for Income Tax. The lower rate also applies to balances already in the main pool, which slows the relief on past investment rather than removing it.Full expensing continues for qualifying companies, and the Annual Investment Allowance remains at £1 million.

Employment costs: the National Living Wage rises to £13.21

From 1 April 2027, the National Living Wage for workers aged 21 and over rises 3.9% to £13.21 an hour. The rate for 18 to 20-year-olds rises to £11.27, and the rate for 16 to 17-year-olds and eligible apprentices to £8.31. Employee and employer National Insurance rates are unchanged.Mandatory payrolling of benefits in kind is being phased in. From 6 April 2027, employers must payroll taxable expenses and company cars, car fuel, vans, van fuel and employer-provided medical benefits. Most other benefits follow from 6 April 2028, while employment-related loans and living accommodation stay outside the mandatory regime. Benefits provided in 2026/27 are still reported on a P11D, so employers will run both systems during 2027/28.Employers who want to payroll non-mandatory benefits voluntarily from April 2027 can register when HMRC’s service reopens in November 2026.

Other measures for owner-managed businesses and individuals

• The Income Tax trading allowance triples from £1,000 to £3,000 from 6 April 2027, so more people with small side businesses can earn tax-free without reporting it.The government will not proceed with new reporting requirements for close companies.The process for claiming research and development tax relief is to be improved.

Key dates and what to review

• Business owners: consider how the BADR limit and the transitional rules affect any planned sale or succession, and whether the company could meet the Founders’ Relief conditions.

• Landlords and savers: model the 2027/28 position at the new rates, including how property and savings are held.

• Employers and investing businesses: budget for the April wage increase and the payrolling timetable, and check how the 1 January 2027 date affects the timing of equipment purchases.

Download the UHY Autumn Budget 2026 Summary

Our 31-page summary sets out each announcement in full, covering personal and business taxation, Capital Gains Tax, Inheritance Tax, employment taxes, capital allowances, property taxation and VAT. It has separate sections for employees, business owners, property owners, savers and individuals building their wealth.

Contact UHY Williamson Croft

Contact Taylor Rogers as below with any questions you may have about the implications of the Budget 2026.

This article is for general information only and does not constitute tax, legal or financial advice. It reflects announcements made at the Autumn Budget on 28 October 2026 and information available on 29 October 2026. Many of the measures described are subject to consultation, draft legislation and parliamentary approval, and may change before they take effect. The outcome for any individual or business depends on their particular circumstances. You should take professional advice before acting, or refraining from acting, on anything in this article. UHY Williamson Croft accepts no responsibility for any loss arising from reliance on it.