10% CGT on £10m? Who Actually Qualifies for Founders’ Relief?

10% CGT on £10m? Who Actually Qualifies for Founders’ Relief?

Budget 2026 has announced a new Founders’ Relief that could give qualifying founders a 10% Capital Gains Tax rate on up to £10 million of lifetime gains.

That is a significant headline.

But it does not mean every founder selling a successful UK company from 2027 will pay 10% CGT.

The proposed relief has specific conditions covering the founder, their ownership history and the company itself.

So before building an exit plan around the 10% rate, there is one question to answer:

Would your business actually qualify?

What Did Budget 2026 Announce?

Founders’ Relief is a new CGT relief, separate from Business Asset Disposal Relief.

It is intended to give qualifying founders and significant early investors in high-growth, innovative UK companies a 10% CGT rate on qualifying share disposals, up to a £10 million lifetime limit per individual.

The relief is intended to apply to qualifying disposals made from 6 April 2027.

The important qualification is that the detailed rules are not final yet.

HM Treasury has launched a technical consultation, which closes on 30 November 2026, before legislation is introduced through Finance Bill 2026/27.

So the 10% rate is announced.

The detailed eligibility framework is still being finalised.

What Does the Founder Need to Qualify?

The proposal is aimed at people who had a substantial role in building the company from an early stage.

Under the current proposal, the individual would generally need to have:

• held at least 25% of the company's ordinary share capital when the relevant trading activity, or preparation for it, began;

• held the shares or securities for at least five tax years before disposal; and

• been UK-resident under the Statutory Residence Test for at least five continuous tax years before the disposal.

That means the relief is not simply based on owning a large stake at the point of sale.

How you came into the business, how long you held the interest and your residence history can all matter.

The Company Has to Qualify Too

The founder meeting the conditions is only one side of the test.

The company would also need to meet proposed requirements including:

• being within the scope of UK Corporation Tax;

• having a substantial UK presence for the five accounting periods before disposal;

• being a qualifying trading company or holding company of a qualifying trading group;

• continuing the trade for which the company was originally established;

• having at least £10 million of turnover; and

• having at least 15 qualifying full-time equivalent employees in the relevant accounting period.

So a profitable UK company does not automatically become a Founders’ Relief company.

The proposal is aimed at businesses that have reached a particular level of scale and UK economic activity.

What Makes a Company “High-Growth”?

This is where the proposal becomes more specific.

The company would need to satisfy at least two of three proposed growth and innovation tests.

Turnover growth

Average annual compound growth in turnover of at least 25% across three consecutive accounting periods, with the required turnover threshold at the start of that period.

Employee growth

Average annual compound growth of at least 25% in qualifying full-time equivalent employees across three consecutive accounting periods, again subject to the required starting level.

R&D

At least £1.5 million of qualifying R&D expenditure, with the relevant R&D tax relief conditions and claims satisfied.

So “high-growth” is not simply a description a founder can give their business.

The proposed rules are designed to test it against measurable growth or innovation.

What Does This Mean for a Founder Who Has Moved to the UAE?

This is one part of the proposal that UAE-based founders should look at carefully.

The current proposal requires the individual to have been UK-resident under the Statutory Residence Test for five continuous tax years before the disposal.

So if you have already moved to the UAE, you should not assume that the new 10% rate will automatically be available on a future sale.

Your residence history needs to be tested against the proposed condition.

That is a specific Founders’ Relief eligibility issue, not simply a question of where you live when you eventually sell.

What About the £10 Million Limit?

The £10 million figure is a lifetime limit on qualifying gains per individual.

It is not an annual allowance.

There is also an interaction with other CGT reliefs: from 6 April 2027, claims under Business Asset Disposal Relief and Investors’ Relief will reduce the Founders’ Relief lifetime limit available.

So a founder's previous and future use of these reliefs can matter when looking at the overall exit position.

Is the 10% Rate Final Yet?

The government has announced the relief, but the detailed rules are still being consulted on.

The consultation closes on 30 November 2026, with legislation expected through Finance Bill 2026/27. The intended start date is 6 April 2027.

That means founders should understand the proposed conditions now, but should not restructure a business solely on the assumption that every detail will remain unchanged.

The consultation also proposes rules to address avoidance and ensure the necessary company records are available to support a claim.

Should You Plan Your Exit Around Founders’ Relief?

You can start testing your position now.

You should know whether your:

• ownership history;

• shareholding;

• holding period;

• UK residence history;

• company turnover;

• employee numbers;

• growth record; and

• R&D activity

are likely to fit the proposed framework.

That does not mean restructuring simply to chase the relief.

It means understanding your position early enough to identify any issues before an exit is already being negotiated.

The 10% Headline Is Only the Starting Point

Founders’ Relief could be highly valuable for a qualifying founder.

But 10% CGT on £10 million is not a blanket rate for successful business owners.

The proposed rules look at the founder and the company.

Your ownership history, holding period and UK residence may matter. So may the company's UK presence, scale, growth and innovation.

And the detailed rules are still being finalised.

Before assuming the 10% rate applies to your exit, test your business against the proposed conditions.

How Evolve Tax Can Help

If you are considering selling a UK business from 2027 onwards, Evolve Tax can assess your position against the proposed Founders’ Relief conditions and the other CGT reliefs that may be relevant.

We can review your ownership history, residence position, company structure, growth profile and proposed exit before you make structural decisions.

Speak to Evolve Tax before assuming the 10% rate applies to you.

Frequently Asked Questions

1. Is Founders’ Relief already law?

Not yet. Budget 2026 announced the relief and HM Treasury has launched a technical consultation on its detailed design. Legislation is expected through Finance Bill 2026/27.

2. When is Founders’ Relief expected to start?

The proposed relief is intended to apply to qualifying disposals made on or after 6 April 2027.

3. How much gain can qualify?

The proposed lifetime limit is £10 million of qualifying gains per individual.

4. Does every founder qualify?

No. The proposal includes conditions covering the founder's ownership and holding period, UK residence, and the company's UK presence, trading activity, scale, growth and innovation.

5. Can a UAE-resident founder qualify?

The current proposal requires the individual to have been UK-resident under the Statutory Residence Test for five continuous tax years before the disposal. A founder who has moved to the UAE therefore needs to examine this condition carefully.

6. Does Founders’ Relief replace BADR?

No. Founders’ Relief is a separate relief. However, claims under BADR and Investors’ Relief from 6 April 2027 will reduce the amount of the Founders’ Relief lifetime limit available.

7. Should I restructure my company now to qualify?

Not based solely on today's announcement. The detailed rules are still under consultation, and the government is proposing anti-avoidance provisions alongside the relief.

Conclusion

The Budget 2026 headline is attractive:

10% CGT on up to £10 million of qualifying gains.

But the real question is whether you and your company meet the proposed conditions.

Your ownership history, holding period and UK residence may matter just as much as the company's scale, growth and innovation.

Understand the eligibility first. Then decide whether Founders’ Relief should influence your exit plan.