Bitesize Insights · Budget 2026
A 10% tax rate is the headline. Eligibility is the real question. Budget 2026 proposes Founders’ Relief for founders and significant early investors in high-growth, innovative UK companies. It is not a general tax break for every business owner.
The technical consultation closes on 30 November 2026. Final conditions depend on the consultation outcome and legislation.
What would the founder need to show?
The consultation proposes these individual conditions:
- A 25% ordinary shareholding, with corresponding voting, profit and winding-up rights, when the relevant trade or preparation for it began.
- Ownership of the shares or securities for at least five years before disposal.
- At least five continuous tax years of UK residence before disposal, assessed under the Statutory Residence Test.
The company must qualify too
The proposals include UK corporation tax scope and substantial UK presence, qualifying trading activities, and continuity of the original trade. They also set a scale threshold of £10 million turnover and 15 qualifying full-time employees in the relevant pre-disposal period.
The company would also need to meet at least two of three detailed tests covering turnover growth, headcount growth and qualifying R&D. Each has specific periods, thresholds and evidence requirements. The individual conditions alone are not enough.
The proposed £10 million lifetime limit is reduced by BADR and Investors’ Relief claims made from 6 April 2027. Do not assume the relief limits simply stack together.
What should you prepare now?
Gather your early cap tables, share rights, ownership history and relevant company records. Ask your tax adviser to assess both the individual and company tests before relying on the relief in an exit calculation.
The Consult EFC view
Treat this as an evidence exercise. A clear ownership history, reliable financial information and documented growth will make the eligibility conversation more useful.
Starting smaller? Separately, the Budget proposes increasing the trading allowance to £3,000 from 6 April 2027 for qualifying individual trading income. It is not a £3,000 tax-free profit allowance for limited companies.
For context, read our five-point Budget overview.
Read the Treasury consultation, its proposed qualifying conditions and HMRC’s policy note.
Not sure where your business stands right now?
Book a free 30-minute call with Kish. Bring your numbers, your questions, or just your situation. You will leave with a clearer picture than you arrived with.
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Over 12 years across Big Four audit, Investment Banking, and corporate advisory. Kish works with SaaS founders, tech companies, and ambitious UK SMEs from £1M to £50M in revenue on fundraising, valuations, exit planning, and financial strategy. ICAEW regulated. Big Four trained. Based in London.