If you're planning to sell your business, buy out a shareholder or restructure your company, the Autumn Budget 2026 may affect how you proceed.
Changes to Capital Gains Tax reliefs are due in April 2027, with further reforms to share buybacks and restructurings expected in 2028.
While some details are still being finalised, businesses with plans already taking shape should review their options now.
How are the rules changing for founders and business owners?
Two developments could affect your tax position if you’re planning an exit.
Business Asset Disposal Relief (BADR)
From 6 April 2027, the lifetime limit for gains qualifying for Business Asset Disposal Relief will fall from £1 million to £500,000.
The relief allows eligible business owners to pay a reduced Capital Gains Tax (CGT) rate of 18% on qualifying disposals.
For owners considering retirement, selling their business or transferring ownership, the reduction could mean a greater proportion of their gains becomes subject to standard CGT rates.
If you're already discussing a sale or succession arrangement, it's worth reviewing your expected proceeds, previous use of the relief and proposed transaction timetable with your tax adviser.
New Founders' Relief
The Budget also introduced a proposed Founders' Relief, offering a 10% CGT rate on up to £10 million of qualifying lifetime gains.
The relief is aimed at founders and significant early investors in high-growth, innovative UK companies. However, eligibility will be subject to strict conditions, including requirements relating to the individual's shareholding and the company's growth.
The detailed rules remain under consultation, with the relief intended to apply to qualifying disposals from 6 April 2027.
For eligible founders contemplating an exit, these changes could influence how they structure and time a transaction.
What could the proposed share buyback changes mean for shareholder exits?
A company share buyback can provide a way for an owner or shareholder to exit without finding an outside buyer. It's particularly relevant to succession arrangements, shareholder departures and family businesses.
Under existing rules, qualifying buybacks can receive capital rather than income tax treatment. The government now intends to reform the conditions for getting access to that treatment.
The proposals could affect shareholders who want to:
- retain a minority stake
- remain as directors
- continue supporting the business after they’ve departed
The government has acknowledged concerns about genuine succession arrangements and is considering greater flexibility, particularly for family businesses and temporary consultancy arrangements.
Detailed legislation remains subject to consultation in 2027, with implementation intended from April 2028.
If you're considering a share buyback
The intended outcome needs to be clear from the outset.
- Who will retain ownership?
- Will the departing shareholder continue working in the business?
- What rights or responsibilities will they keep?
The answers could affect both the legal arrangements and the tax treatment.
How might the restructuring reforms affect business plans?
The Budget also outlined changes to the tax treatment of certain capital reductions and corporate demergers.
These arrangements can help businesses separate trading activities, reorganise group companies or prepare individual divisions for sale.
For example, a business might want to separate its property assets from its trading operations before bringing in an investor or selling part of the group.
The government intends to change how certain repayments of capital are taxed following share reorganisations.
At the same time, it plans to broaden statutory demerger relief to accommodate a wider range of genuine commercial restructurings.
Consequently, the reforms could affect which restructuring routes are available or commercially attractive.
With the changes expected from April 2028, businesses already considering a reorganisation should review their preferred structure alongside their legal and tax advisers as the proposals develop.
What should businesses planning an exit or restructuring do now?
Although some reforms could change after consultation, there are practical steps you can take now to assess their potential impact on your plans.
1. Be clear about your intended outcome
Are you planning a complete exit, a gradual withdrawal or a transfer of ownership to family members? If you're restructuring, what do you need the new arrangement to achieve?
Your commercial objectives should guide the choice of transaction structure.
2. Review your existing legal arrangements
Check whether your shareholder agreements, articles of association and existing share rights support your plans.
For example, a proposed shareholder exit may require amendments to existing agreements or changes to voting and ownership rights.
3. Consider the appropriate transaction structure
A share sale, company buyback or restructuring may offer different advantages and involve different legal requirements.
Working with your legal and tax advisers can help you assess the options before committing to a particular approach.
4. Review your timetable
Consider when the transaction needs to happen and what you must complete beforehand.
Shareholder approvals, legal documentation, lender consents and contractual restrictions can all affect the timetable. You also need to consider the different implementation dates laid out in the Budget.
It's sensible to start planning early, particularly where several shareholders or group companies are involved.
However, accelerating a transaction purely in response to tax changes could expose your business to unnecessary commercial or legal risks.
Planning a business exit or restructuring?
The Autumn Budget changes give you another reason to review your plans before committing to an ownership change or restructuring.
If you're considering a founder or shareholder exit, company buyback, succession arrangement or reorganisation, our corporate solicitors can help you assess the legal structure, prepare the necessary documents and implement your plans, working alongside your tax adviser.
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