Key takeaways
BADR and Founders Relief
CGT changes bode well for founders of £10m+ companies.
Savings and property income rates
Increases may lead to restructuring of property assets, if currently held individually.
Mansion Tax
Properties in the capital and the South East may be subject.
On 28 October 2026, Chancellor John Healey delivered the UK government's Autumn Budget, setting out a range of measures designed to support economic growth, investment and productivity.
Against a backdrop of economic uncertainty, inflationary pressures and global market volatility, the Budget introduced a number of tax changes that will affect businesses, entrepreneurs, investors and high-net-worth individuals.
In this article, we examine the most significant announcements, and the practical considerations organisations should be assessing in the months ahead.
Business Asset Disposal Relief (BADR)
Previously known as Entrepreneur’s Relief – which used to have a lifetime limit at £10 million on qualifying gains and was then reduced to £1 million and a 10% tax rate (increased to 14% in the last Budget) – BADR will now be further reduced to down to £500,000. The new lifetime limit is applicable to disposals from 6 April 2027 at a rate of 18%.
This is a further reduction in relief for business owners who are seeking to realise the growth in the value of their businesses. This might change the appetite of any outright disposal of business interests.
CGT Founders Relief
To counter the reduction in relief on BADR, the government has announced Founders Relief, a new CGT relief. The mechanics and rates seem similar to the old entrepreneur’s relief but the conditions on the level of ownership interest differ. There are also stricter tests to meet for an individual to qualify.
Qualifying conditions for individuals
Founder’s Relief will be available to those who have started or invested early in UK companies that have demonstrated sustained high growth.
Individuals need to:
Hold 25% of the ordinary share capital (together with corresponding voting rights and rights to distributable profits and assets on a winding up). The shareholding needs to have been held since the trade commenced.
The shares must have been held for five years.
The individual is UK resident under the SRT for five consecutive years before the disposal.
The 25% condition will also be met through the holding company of a trading group.
At this stage, only individuals would be able to claim relief. The relief does not extend to Trusts or other vehicles.
Qualifying conditions for companies
Must be a UK resident company and have a substantial presence in the UK for the five accounting periods before the disposal;
Must be a trading company;
The nature of the trade cannot have been altered since it was established;
Must have generated a turnover of at least £10 million in the accounting period prior to disposal; and
Have at least 15 qualifying full-time employees in the accounting period prior to disposal.
Additional considerations
There are also additional tests to ensure the company has demonstrated success in terms of growth and innovation. A turnover test, headcount test and an innovation test.
The turnover and head count conditions described below will measure growth by comparing each accounting period with the one before and will set a minimum level that has to be met in the period before the first of three years of consecutive growth.
The company will need to meet two of three tests as follows:
1. Turnover test
Annual average compound growth in turnover of 25% across three consecutive accounting periods within the ten years before disposal, with turnover of at least £10 million in the accounting period before the first of these three periods.
2. Headcount test
Annual average compound growth of at least 25% in qualifying full-time equivalent employees across three consecutive accounting periods, within the 10 years before disposal, with at least 15 full- time employees in the accounting period before the first of these three periods. A full-time employee is defined as an individual working at least 35 hours per week.
3. Innovation test
The company must have (1) incurred qualifying expenditure of £1.5 million or more on research and development (R&D) for which it met all the conditions to make an R&D tax relief claim and (2) have claimed R&D tax reliefs for that expenditure for an accounting period or periods ending within the three years of the disposal.
Subject to conditions being met, a 10% CGT rate is applied on qualifying disposals up to a lifetime limit of £10 million. Any previous claims of BADR relief reduce this lifetime limit.
Claims for Founders’ Relief will need to be made in the individual’s Self-Assessment return for the tax year in which the disposal takes place. Claimants will need to include the information HMRC prescribes, including the periods relied on for each eligibility condition.
This will be welcome relief for founders who have been trading in the UK for a period of time. It adds an initiative for individuals who wish to stay in the UK for the medium to long term.
It is worth noting that the government is intending on introducing legislation through amendments to the Finance Bill 2026/27 – so that the relief can take effect on or after 6 Aprill 2027.
Inheritance Tax (IHT)
There were no additional announcements in respect of Business Relief or Agriculture Relief.
As many will be aware, from 6 April 2027, most unused pension funds and pension death benefits in the UK will be included in the value of a deceased person's estate for IHT purposes, subject to a standard rate of 40% if the total estate exceeds the IHT threshold.
The government will introduce legislation which allows those administering an estate to decide whether notional pension property included in the general component of the estate or as a separate component for the purposes of calculating the reduced rate of IHT, when part of the estate is left to charity. We will update when we hear more.
Income Tax
There were some increases to income tax rates on savings and property income, announced by the Chancellor. From the 2027/28 tax years:
The savings basic rate will be 24%
The savings higher rate will be 24%
The savings additional rate will be 49%
These rates also apply to property income and make this a further blow to property investors and savers.
This therefore follows that the rates which are applicable to trusts will be 49% from 6 April 2027.
Pensions
Collecting tax due on excess lump sum death benefits
The Chancellor also announced that, where a member who died before age 75’s available lump sum and death benefit allowance is exceeded, the excess will no longer be treated as pension income of individual beneficiaries. Instead, a tax charge will be raised against those beneficiaries on their portion of the excess by reference to their marginal rate of income tax for the year the lump sum was paid.
The change will apply both where a payment would otherwise be taxable as pension income of the recipient, and where it would otherwise be subject to the special lump sum death benefits charge.
Property and land
One measure that has attracted considerable attention is the proposed High Value Council tax surcharge, also referred to as ‘the Mansion Tax’, which is currently due to take effect from 2028.
The High Value Council Tax Surcharge will be an additional charge on residential properties worth £2 million or more.
Valuations are based on a range of evidence, including sales data of comparable properties around the April 2026 valuation date, property type, age, number of rooms, and area. Most properties can be placed into the correct band based on the information the VO holds already.
It is expected that taxpayers will see their draft bands in Autumn 2027. Revaluations will be conducted every five years and the next revaluation will take place in 2033.
The charging structure is as follows:
Threshold (£m) Rate (£)
£2.0m - £2.5m: £2,500
£2.5m - £3.5m: £3,500
£3.5m - £5.0m: £5,000
£5.0m+: £7,500
Any changes to the bands will be decided alongside revaluations and the charges will increase in line with CPI inflation each year from 2029-30.
Cryptocurrency
Although the Budget contained relatively little new commentary beyond the July draft legislation, it confirms the UK government’s commitment to developing a more tailored tax framework for digital assets, and its intention to proceed with measures designed to modernise the tax treatment of stablecoins and certain decentralised finance (DeFi) activities.
Stablecoins
One of the most significant announcements is the proposed introduction of a bespoke tax regime for qualifying stablecoins. Draft legislation provides that disposals of eligible stablecoins by individuals and trustees would be exempt from Capital Gains Tax (CGT). Certain interest-like returns generated from eligible stablecoins would be taxed as savings income. For companies, taxation would generally follow the accounting treatment adopted in the company accounts.
An eligible stablecoin is proposed to be a cryptoasset designed to maintain a stable value relative to sterling or another currency, backed by sufficient reserve assets and designed primarily for payment or settlement purposes. The stablecoin must also be widely available and actively traded.
Crypto asset Loans and Liquidity Pools
The government has also published draft legislation covering cryptoasset lending arrangements and liquidity pools. Under the proposals, transfers into qualifying arrangements would generally be treated on a ‘no gain, no loss’ basis, deferring CGT until a later economic disposal occurs.
Enhanced HMRC Compliance Powers
Alongside these changes, the government is proposing reforms to HMRC information and inspection powers relating to cryptoassets. These measures are intended to support international information exchange standards and improve oversight of cryptoasset-related businesses.
For more information and analysis on how the 2026 Autumn Budget may impact your business or personal tax affairs, get in touch with our Private Client team.
This article was developed with the support of Senior Associate Nathan Henry.
