Business asset disposal relief now taxes founders at 18% since April 2026, and the Budget debate is whether that rate should be softened again. The sale is taxed when it completes, not when the money is reinvested, so founders can face a bill before they decide what to do with the cash.
John Healey said this week’s Budget will back Britain’s “bloody-minded entrepreneurs”, but the current framework still taxes a founder’s gain in the year of sale regardless of what happens next. Under the relief, the gain is no longer sheltered once the business is sold and the cash sits outside the qualifying business asset.
From 10% to 18%
10% was the rate a founder could pay until 2020 on up to a £10 million sale. The limit later fell to £1 million, and since April 2026 the rate has climbed to 18%, bringing entrepreneurs’ relief up to the standard Capital Gains Tax rate paid by basic-rate taxpayers.
£3.6 billion is the Treasury’s own estimated hit from raising the higher Capital Gains Tax rate by 10%. That estimate sits behind the refusal to lift CGT, and it explains why the debate is now about whether the government should restore a more generous treatment for founders rather than widen the tax base again.
Business Relief and the sale trap
Business Relief only covers qualifying business assets, and once a sale completes and the owner is holding cash, the relief stops. Section 107 of the Inheritance Tax Act 1984 keeps relief in place only if the money is reinvested elsewhere, while section 113B allows a further route in one case where someone sells a business they were given and the person who gave it to them dies within seven years of the gift.
Three years is the window in that section 113B case to buy another qualifying business after the sale. If the owner dies before reinvesting, the estate can face up to 40% tax on the proceeds, which is why the order of sale, reinvestment and succession matters as much as the headline rate.
The Budget and founders
Five years is the period over which the source says holding Capital Gains Tax and Inheritance Tax rates would cost the Treasury little up front, and it argues that restoring indexation would mean founders pay tax only on the real growth in their business’s value. For founders, that turns the Budget into a practical test of whether the UK wants them to sell, keep cash at home and start again, or delay exits while the rules keep changing.
Twentieth fiscal event since 2016 is the backdrop to this Budget, and the source says business owners can plan exits that take years, while changing the rules every six months makes long-term planning difficult. If the Chancellor wants founders to build, sell and reinvest, the next move is whether Capital Gains Tax and Inheritance Tax are left alone or pushed back toward the lighter treatment that once applied.
