Guide for business owners planning a sale or exit

Selling your business? Why 6 April 2027 matters

From 6 April 2027 the lifetime limit for Business Asset Disposal Relief halves from £1 million to £500,000. The 18% rate stays the same. If your gains are over £500,000, the date your sale counts as made could change your tax bill by up to £30,000. A rushed or poor deal can cost far more, so plan the timing, not just the tax.

Talk to us before you sell Read our Budget 2026 guide

By Katie Hirst FCCA, Elm Financial Solutions. Checked against GOV.UK on 12 November 2026. Last reviewed November 2026.

What is changing

A smaller limit, the same rate

Announced at the Budget on 28 October 2026. The legislation will be in Finance Bill 2026-27.

The limit halves

For disposals on or after 6 April 2027, the lifetime limit falls from £1 million to £500,000. Relief you have already claimed on earlier disposals counts towards it.

The rate stays at 18%

Qualifying gains up to the limit are taxed at 18%, the rate since 6 April 2026. Gains above the limit are taxed at 24%. Because qualifying gains use up your basic rate band first, that applies to most sellers, not just higher rate taxpayers.

Early contracts can be caught

New anti-forestalling rules mean that if a contract is signed before 6 April 2027 but completes afterwards, the £500,000 limit can still apply, unless you can show it was not entered into with a purpose of getting the tax advantage.

Worked example

What the change costs a seller

Take an owner selling shares in their own trading company, with a gain of £1 million that qualifies in full and no relief claimed in the past. Figures are before the £3,000 annual exempt amount.

Sold before 6 April 2027, the whole £1 million is taxed at 18%: £180,000 of Capital Gains Tax.

Sold on or after 6 April 2027, £500,000 is taxed at 18% and the other £500,000 at 24%: £210,000, which is £30,000 more. On a £750,000 gain the extra is £15,000. If your total qualifying gains, including any earlier claims, are £500,000 or less, nothing changes.

Check what you have already used

The limit is for your lifetime, not per sale. If you claimed the relief on a £300,000 gain years ago, you have £700,000 left before April 2027, but only £200,000 after it.

Timing

Exchanging contracts early may not be enough

Normally, when you sign an unconditional contract to sell, the sale counts as made on the date of the contract, not the date it completes. That would let someone sign in March 2027 and complete later in the year.

The new rules stop that being used to keep the old limit. If an unconditional contract is signed before 6 April 2027 but the deal does not complete until after then, the £500,000 limit applies unless you can show the contract was not entered into with a purpose of getting a tax advantage from the contract-date rule. If the buyer and seller are connected, for example family members, you must show it was entered into for wholly commercial reasons. If you rely on either exception and the gain is over £100,000, you must also make a statement.

There is a similar rule for share reorganisations. If your shares were reorganised, or swapped into a company owned by the same people, and you elect on or after 6 April 2027 to treat that as a sale so you can claim the relief, the £500,000 limit applies.

Do not let the tax drive the deal

A buyer who senses you have to complete by a deadline has the upper hand. A lower price, worse terms or the wrong buyer can easily cost more than £30,000. Get the timing reviewed early, then negotiate on the deal itself.

Before you decide

Four things to check first

The relief has conditions, and they apply whatever the limit.

Do you qualify?

For shares, you usually need at least 5% of the shares, the votes and the economic rights, to be an officer or employee, and the company must be trading or the holding company of a trading group, all for at least two years before the sale. EMI shares have different rules.

How much have you used?

Earlier claims count towards the lifetime limit. Gather the figures from past tax returns before you work out what the change means for you.

Closing a solvent company

In a members' voluntary liquidation, each distribution counts as a separate disposal when you receive it, so payments on or after 6 April 2027 fall under the new limit. Distributions must come within three years of the company stopping trading.

Founders' Relief

A new 10% relief on up to £10 million of gains starts on 6 April 2027 for founders and early investors in high-growth, innovative companies. Most owner-managed businesses will not qualify.

Before or after the deadline

The same £1 million gain, sold at different times

For a seller whose whole gain qualifies, with no earlier claims, before the annual exempt amount.

Disposal on or after 6 April 2027

Only £500,000 taxed at the 18% rate

The other £500,000 taxed at 24%

£210,000 of Capital Gains Tax

Disposal before 6 April 2027

The whole £1 million taxed at 18%

Up to £1 million of lifetime limit available

£180,000 of Capital Gains Tax

Checklist

If you are thinking of selling in the next year or two

Estimate your gain
Start with what the business might sell for and what you paid for your shares. If the gain is under £500,000, the change will probably not affect you.
Check the conditions
Make sure you have met the shareholding, role and trading conditions for at least two years, and will still meet them on the date of sale.
Add up past claims
Find out how much of the lifetime limit you have already used.
Test the timetable
Ask whether completing before 6 April 2027 is realistic. Due diligence, finance and legal work often take longer than expected.
Take advice before you sign heads of terms
Contract dates, deferred payments and earn-outs all affect when, and how, the gain is taxed. Get them reviewed before you commit.
Know the claim deadline
For a sale in the 2026 to 2027 tax year, the relief must be claimed by 31 January 2029, usually on your tax return.

Talk to us before you sell Our support for founders

Common questions

BADR changes: your questions answered

Is the £500,000 limit per person or per business?

Per person, over your lifetime. If two shareholders each qualify, including a husband and wife, each has their own limit.

Will signing the contract before 6 April 2027 protect the old limit?

Not on its own. If the deal completes after 5 April 2027, the £500,000 limit applies unless you can show the contract was not entered into with a purpose of getting the tax timing benefit.

Does the rate change too?

No. The rate stays at 18% for gains within the limit. The change is to how much of your gain can qualify.

I am a basic rate taxpayer. Will I still pay 24% on the excess?

Usually, yes. Gains that qualify for the relief use up your basic rate band first, so any gain above the limit is normally taxed at 24%.

Is the change law yet?

Not yet. It was announced at the Budget on 28 October 2026 and will be legislated in Finance Bill 2026-27, so the detail could still change.

I am closing my company rather than selling it. Does this apply?

It can. Shareholders in a solvent company that is wound up can often claim the relief on what they receive, and each distribution is a separate disposal. Anti-avoidance rules can tax distributions as income instead if you carry on a similar trade within two years, so talk to us before starting the process.

What about deferred payments and earn-outs?

Fixed deferred payments are normally taxed by reference to the contract date. Earn-outs and loan notes work differently, and their timing interacts with the April 2027 change, so get them reviewed before you agree terms.

Should I sell now to beat the deadline?

Only if the sale makes sense anyway. For someone with £1 million of qualifying gains and no earlier claims, the change costs about £30,000, and a forced timetable can cost more than that.

Talk to Elm

Planning to sell or step back? Let's look at the timing together

We will check whether you qualify, how much relief you have left and what the April 2027 change means for your plans.

Book a no-obligation chat Ask AI a quick question

Call 07966 795440 or email info@elmfinancial.co.uk. Based in Matlock, Derbyshire, working with businesses across the UK.

Katie Hirst FCCANovember 12, 2026

Sources: GOV.UK, Capital Gains Tax: new Business Asset Disposal Relief lifetime limit (policy paper, 29 October 2026); Business Asset Disposal Relief: eligibility, rates and how to claim; Founders' Relief technical consultation; Budget 2026 overview of tax legislation and rates. All checked 12 November 2026. The changes are subject to legislation. This guide is general information, not advice for your circumstances.

BADR lifetime limit change on GOV.UK Business Asset Disposal Relief on GOV.UK Founders' Relief consultation