Founders' Relief targets high-growth businesses, excludes smaller enterprises

Summarised from 2 outlets · Updated 28 Oct, 16:50 · Archive

The government has introduced Founders' Relief, offering a 10 per cent capital gains tax rate for entrepreneurs, but strict eligibility conditions exclude most small and medium-sized businesses.

The government has introduced Founders' Relief, which provides a reduced capital gains tax rate of 10 per cent on lifetime gains for entrepreneurs. The relief replaces the current Business Assets Disposal Relief, which was previously available on the first £10 million of gains but will be restricted from April 2027 to £500,000 of gains at a rate of 18 per cent.

To qualify for Founders' Relief, the conditions are stringent. Founders must have held at least 25 per cent of the company's shares since it started trading and must have held them for at least five years. The company must have a turnover of at least £10 million and employ at least 15 full-time staff, as well as meeting demanding growth and innovation tests.

This means that many traditional small and medium-sized businesses, family-owned businesses and owner-managed companies are unlikely to qualify. The relief is firmly focused on businesses demonstrating significant scale, growth and innovation, in line with the government's growth agenda, but this leaves many smaller businesses excluded despite their contribution to economic growth.

Founders' Relief targets high-growth businesses, excludes smaller enterprises — Image: Eastern Daily Press

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How it is being reported

Founders’ Relief rewards growth, but leaves many small and medium businesses behindIn some ways it’s back to the future with the introduction of Founder’s Relief – but with strings attached, writes Shaun Davison of Lovewell Blake Financial Planning.Eastern Daily Press · 28 Oct, 16:30
Founders’ Relief rewards growth, but leaves many small and medium businesses behindIn some ways it’s back to the future with the introduction of Founder’s Relief – but with strings attached, writes Shaun Davison of Lovewell Blake Financial Planning.Norwich Evening News · 28 Oct, 16:30

In this story: Lovewell Blake Financial Planning

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