Guide

Founders' Relief: the 10% rate from April 2027 and who qualifies

Updated 2026-11-07

Budget 2026 proposed a 10% Capital Gains Tax rate for founders of high-growth UK companies. The consultation draft's conditions close on 30 November 2026; most companies will not meet them.

Talk to a specialist Sale price, relief, Capital Gains Tax and what reaches your account, whether you complete by 5 April 2027 or after.

Did you hold at least 25% of the ordinary shares when the company's trade, or its preparation, began?

With the matching votes and rights to profits and assets on a winding up. The 25% may be held through the holding company of a trading group.

Will you have held the shares for at least five years when you sell?

Shares bought later count too: the draft does not restrict the relief to your founding shares.

Will you have been UK resident for at least five continuous tax years before the sale?

Under the Statutory Residence Test.

Is the company within UK Corporation Tax, with a substantial UK presence for the last five accounting periods?

UK resident for Corporation Tax, or trading in the UK through a permanent establishment.

Is it a trading company, outside the excluded trades, still carrying on the trade it was formed for?

The excluded trades are the Enterprise Investment Scheme's, such as dealing in land, financial services or property development.

Did it have turnover of at least £10 million and at least 15 qualifying full-time employees in its last accounting period?

A qualifying employee works at least 35 hours a week at no less than the National Minimum Wage; directors, contractors and agency workers do not count.

Turnover test: did turnover grow at an average 25% a year over three consecutive accounting periods in the last ten years, from at least £10 million?

One of three growth and innovation tests. The company needs two.

Headcount test: did full-time employees grow at an average 25% a year over three consecutive periods in the last ten years, from at least 15?

One of three growth and innovation tests. The company needs two.

Innovation test: did the company spend £1.5 million or more on qualifying R&D and claim R&D tax relief on it in the three years before the sale?

One of three growth and innovation tests. The company needs two.

Your gain on the sale

Sale proceeds less what you paid for the shares and your costs of selling.

Founders' Relief, on the consultation draft

Green: on the consultation draft you meet every condition you answered

Tax with Founders' Relief from 6 April 2027 (draft)	£499,700
Tax with BADR from 6 April 2027	£1,169,280
What Founders' Relief would save against BADR	£669,580

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How this calculator works

Every condition is the consultation draft's, published 28 October 2026 and closing at 11:59pm on 30 November 2026 (CGT Founders’ Relief: technical consultation). The government will use the responses to finalise the design, with legislation in the Finance Bill 2026/27, so any condition here can change or disappear (HM Treasury).
The light reads your answers only. Green means you answered Yes to every individual and company condition and to at least two of the three growth and innovation tests; Amber means nothing you answered rules you out but a Not sure answer decides it; Red means at least one answer fails a condition.
The tax rows compare the two reliefs for a sale on or after 6 April 2027: Founders' Relief at 10% on up to £10 million of gains (HMRC), and Business Asset Disposal Relief at 18% on up to £500,000 (HMRC). Both assume you qualify for the relief in that row, have used none of either limit, and pay 24% on the rest after the £3,000 annual exempt amount, which is set against the 24% gains first (Budget 2026, Annex A).
Not modelled: Investors' Relief, a sale to an Employee Ownership Trust, shares held by trustees, anti-avoidance rules the draft says will follow, and how the company proves its turnover, headcount or R&D to HMRC. It is a first read of the draft, not tax advice.

What the draft proposes

The relief would apply a 10% Capital Gains Tax rate to qualifying share disposals made on or after 6 April 2027. Its lifetime limit is £10 million of gains per individual (HM Treasury).

Business Asset Disposal Relief or Investors' Relief claimed from 6 April 2027 reduces that £10 million (Budget 2026, Annex A). Nothing has been legislated: the government will finalise the design from the responses and legislate in the Finance Bill 2026/27.

The conditions, as drafted

Founders' Relief conditions in the technical consultation of 28 October 2026
Who	Condition
You	Held 25% of the ordinary share capital, with its votes and economic rights, when the company's trade or its preparation began
You	Held the shares or securities for at least five years before the sale
You	UK resident under the Statutory Residence Test for at least five continuous tax years before the sale
The company	Within UK Corporation Tax, with a substantial UK presence for the five accounting periods before the sale
The company	A trading company or trading group, outside the Enterprise Investment Scheme's excluded trades, still in the trade it was formed for
The company	Turnover of at least £10 million and at least 15 qualifying full-time employees in the accounting period before the sale
The company	Two of three tests: 25% average turnover growth over three periods, 25% average headcount growth over three periods, or £1.5 million of R&D claimed for in the last three years

Source: CGT Founders' Relief: technical consultation (PDF)

Founders' Relief or Business Asset Disposal Relief

From 6 April 2027 the two reliefs part company. On a £5,000,000 gain, the draft's 10% rate costs £499,700. Business Asset Disposal Relief, cut to £500,000 of gains at 18%, costs £1,169,280, because £4,500,000 of the gain is taxed at 24%.

Before 6 April 2027 Founders' Relief does not exist, and the same sale costs £1,139,280 with the £1,000,000 limit. The figures are this site's calculator at a nil base cost, with neither relief already used.

Every condition on this page is the consultation draft's, read on 7 November 2026. The consultation closes on 30 November 2026 and the conditions can change before the Finance Bill 2026/27 is passed. This page will be re-read when the bill's Founders' Relief clauses are published.

Want the number checked before you complete?

Tell us about the sale and we will pass your details to business valuation and exit advisers, who contact you directly.

Where are you in the process?

When do you need this?

Next: where to reach you.

Free, no obligation
Your details go to at most three advisers
No marketing lists, ever

Questions, answered directly

When does Founders' Relief start?

For qualifying disposals made on or after 6 April 2027, if it is legislated as proposed in the Finance Bill 2026/27. (HM Treasury: Founders' Relief technical consultation)

Can I claim both Founders' Relief and Business Asset Disposal Relief?

They share a limit: Business Asset Disposal Relief or Investors' Relief claimed from 6 April 2027 reduces your £10 million Founders' Relief limit. The draft does not say whether Business Asset Disposal Relief can still apply to a gain above £10 million, so this calculator taxes that part at 24%. (Budget 2026 overview of tax legislation and rates, Annex A)

Sources

This site's own datasets, every figure quoted from its source and dated:

The Badr Rate Ladder carries 7 published figures read from 5 sources' own pages; the 6 published figures given by time run from 1,000,000 to 10,000,000 GBP, read 10 November 2026.
The UK CGT Rates Allowances carries 34 published figures read from 4 sources' own pages; the 30 published figures given by rate band run from 10 to 24 percent, read 11 November 2026.

Know the net figure before you sign.

Sale price, relief, Capital Gains Tax and what reaches your account, whether you complete by 5 April 2027 or after.

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