For business owners, two changes stand out: the lifetime limit on Business Asset Disposal Relief is being halved, and a new Founders’ Relief is on the way.
Every Budget produces headlines. Very few of them should lead to immediate action.
On 28 October the Chancellor, John Healey, announced a series of changes. Much of the focus was on energy bills and household costs. Here are the measures most relevant to business owners, investors and families, in plain English.
What changed
• Business Asset Disposal Relief. From 6 April 2027, the lifetime limit on gains that qualify for the relief falls from £1 million to £500,000. Gains above the limit are taxed at standard Capital Gains
Tax rates. The Budget document says three in four claimants will still receive relief on their entire gain.
• Founders’ Relief. A new relief will tax qualifying share disposals at 10% from 6 April 2027, up to a lifetime limit of £10 million. It is aimed at founders and significant early investors in high-growth UK companies. The eligibility rules are still being consulted on.
• Company payments to shareholders. The government will reform how payments from companies to individual shareholders are taxed, to reduce opportunities to extract profits at more favourable rates. The detail is still to come.
• Property and savings income. From 6 April 2027, a further two percentage point rise in Income Tax applies to taxable property income and to savings interest above the Personal Savings Allowance. Combined with the increase already announced, the rates will be 24%, 44% and 49% for basic, higher and additional rate taxpayers. The Budget document says 84% of Income Tax payers will be unaffected in 2027/28.
• ISAs. The proposed cut to the Cash ISA allowance, from £20,000 to £12,000 for under-65s, has been reversed. A First-Time Buyer ISA will replace the Lifetime ISA for new savers from April 2029, and the government will look at a new ISA to reward first-time investors.
• Pensioners. A new Pension Tax Allowance means pensioners whose total income is no higher than the full new State Pension, £13,037 in 2027/28, will not pay Income Tax. The allowance is withdrawn at a rate of £1 for every £3 of income above that threshold. It applies from 6 April 2027 until April 2030.
What has not changed
The main rates of Capital Gains Tax, Inheritance Tax, Dividend Tax, National Insurance and Corporation Tax (except for banks) stay as they are for 2027/28. Income Tax stays the same too, apart from the property and savings changes above. Thresholds remain frozen until 2031, including the Personal Allowance and the Inheritance Tax nil-rate bands. The previously announced inclusion of most unused pension funds within the scope of Inheritance Tax will go ahead from 6 April 2027.
What to do now
For most people, the right first step is to check whether the plan you already have still does its job. A sensible plan is built to adapt, so a Budget usually leads to a conversation, not a rush. If you own a business, may sell it in future, or are planning how to pass wealth on, it is worth reviewing your plan with your adviser and accountant together. The detail on Founders’ Relief and on shareholder payments is still to come, and we will be following it closely.
If you would like to talk it through, we would be glad to hear from you.
Tony Robinson / Founder