A week before the Autumn Budget 2026, John Healey said he wanted to back entrepreneurs who keep going “through sheer bloody-mindedness”. 

Yesterday he delivered a new Founders’ Relief, a 10% capital gains tax rate for UK founders, and in the same Budget he halved Business Asset Disposal Relief (BADR), the relief formerly known as Entrepreneurs’ Relief. 

Before the Budget we asked whether the tax reliefs behind UK startups would hold and whether anything new would arrive. 

The answer lies in a mixture.

Autumn Budget 2026 for startups at a glance

Area

What changed

Starts

Exit tax

New Founders’ Relief; BADR limit halved

6 April 2027

Employee equity

EMI2 option limit doubles; longer EMI exercise window

6 April 2027

Funding

£5bn more British Business Bank capacity; £140m for Sovereign AI

From 2027-28

Running costs

R&D claim form scrapped; marketplace VAT; minimum wage up 3.9%

2027

What is Founders’ Relief and who qualifies?

In short: a 10% capital gains tax rate on up to £10m of lifetime gains, against up to 24% on other gains. The tests are still in a technical consultation, so they can change.

  • For whom: founders and significant early investors in high-growth, innovative companies.
  • Proposed tests: a 25% stake, a five-year holding period, £10m of turnover, 15 full-time staff, and either rapid growth or significant R&D.
  • Shared cap: any BADR you claim from April 2027 reduces your £10m.

If you are a founder with investors on your cap table, would you still hold the 25% when you sell?

What happens to Business Asset Disposal Relief (BADR)?

In short: the lifetime limit halves from £1m to £500,000 and the 18% rate stays.

  • What it costs you: for a higher-rate taxpayer with a £1m gain, tax rises from £180,000 to £210,000. Under Founders’ Relief the same gain would be taxed at £100,000 (our arithmetic from the published rates).
  • The price tag: by 2031-32 the BADR cut raises £305m a year, close to the up to £300m a year Founders’ Relief is forecast to cost.

So if you are planning a sale in the next two years, which relief would you fall under? These two interact with each other, so this one is for your accountant.

How did the Budget change EMI and employee share options?

  • EMI2 (the renamed Company Share Option Plan): option limit up from £60,000 to £120,000, exercise period from 10 to 15 years, and it no longer eats into your EMI allowance.
  • EMI: the exercise window after a disqualifying event goes from 90 to 180 days.

What funding did the Budget announce for startups?

  • British Business Bank: £5bn more capacity, including £1.4bn for equity funds and £450m for venture debt that does not dilute founders.
  • Sovereign AI: £140m more for the Sovereign AI Unit, split between £60m for direct investment and £80m for R&D procurement contracts.
  • EIS, SEIS and VCTs: technical changes only, with no limit changes.

What changed for startup running costs?

  • R&D tax relief: the Claim Notification Form is scrapped from 1 April 2027.
  • Capital allowances: the first-year allowance rises from 40% to 50% while the writing-down allowance falls to 12%. The OBR expects this to raise about £1bn a year, so it is a net cost to business.
  • Online sales: from October 2027, marketplaces must collect VAT on sales by VAT-registered UK sellers.
  • Wages: the National Living Wage rises 3.9% to £13.21 from April 2027.

What did the Budget leave out for founders?

  • Reinvestment relief: nothing for founders who put exit proceeds back into UK startups.
  • A new pension measure: the Budget points to the existing Mansion House Accord, which it says should unlock around £25bn for UK private markets.

What is the pattern across the Budget?

We think it comes down to these three things.

  1. Tax rewards the biggest outcomes and trims the middle. Founders’ Relief comes with strict tests, while BADR is cut in half.
  2. Support arrives as flexibility and less paperwork more than as higher limits.
  3. Money moves through state-backed institutions, not new tax incentives for private investors.

The Founders’ Relief consultation is where the next few weeks will be decided.

We will be watching whether the 25% and 15-staff tests survive it, and whether the reinvestment relief founders asked for will follow. 

If your company falls outside the tests, what would make staying in the UK feel like the obvious choice?

Sources: HM Treasury, Budget 2026 (HC 726), 28 Oct 2026 · House of Commons Library, Autumn Budget 2026: A summary (CBP-12252), 28 Oct 2026 · GOV.UK, Business Asset Disposal Relief · Saffery, Autumn Budget 2026: key tax changes · Blick Rothenberg, Founders’ Relief and BADR Changes: Autumn Budget 2026 · Startup Coalition, The Budget 2026 · Finerva, What the 2026 Autumn Budget means for Startups & SMEs · City AM, Budget 2026: Healey reduces threshold for BADR · BM Magazine, Healey unveils 10 per cent Founders Relief and halves BADR limit · Portsmouth News (HWB Chartered Accountants comment)