Healey offers tax break for startup founders while limiting relief for others

Summarised from 2 outlets · Updated 29 Oct, 05:20 · Archive

The Chancellor introduced a 10 per cent capital gains tax rate for startup founders while reducing relief for other business owners.

The Chancellor introduced a new 'Founders' Relief' offering startup creators a preferential 10 per cent capital gains tax rate on up to £10m of lifetime gains when selling qualifying shares. The scheme is designed to encourage high-growth and innovative companies to remain in the UK when their founders cash out.

To offset the cost, Healey simultaneously halved the lifetime allowance for Business Asset Disposal Relief, or BADR, from £1m to £500,000. BADR previously allowed business owners to pay capital gains tax at 18 per cent instead of 24 per cent. The Treasury estimates that three-quarters of existing BADR claimants will be unaffected by the change.

Startup founders welcomed the move. Brent Hoberman, co-founder of Founders Forum Group, said entrepreneurs would 'breathe a sigh of relief', calling Founders' Relief something the sector had 'long been calling for'. Andy Aitken, co-founder of Honest Mobile, described it as an 'incredible budget for Founders in the UK'. However, small business leaders expressed concern. Tina McKenzie, national chair of the Federation of Small Businesses, called on the Chancellor to 'urgently clarify whether he intends to tax or back those who spend a lifetime running and growing successful businesses'.

The scheme will be subject to consultation until 30 November, with implementation due in April 2027.

How it is being reported

• ‘Sigh of relief’ as Healey woos British founders with £10m tax breakBritain’s startup founders have welcomed a sweeping package of tax breaks in John Healey’s first Budget, but investors warned that the Chancellor’s attempt to keep the country’s most promising businesses at home will fall short without more capital to help them grow. At the centre of Wednesday’s announcement was a new Founders’ Relief, offering entrepreneurs [...]City AM · 29 Oct, 05:00
• Healey accused of 'robbing Peter to pay Paul' as he launches £300m raid on entrepreneurs to fund fresh tax break for foundersHealey announced a lower rate of capital gains tax for creators of start-ups, while increasing how much is paid by owners of established businesses who cash out.This is Money · 28 Oct, 19:32

In this story: John Healey · Federation of Small Businesses · Brent Hoberman · Founders Forum Group · Tina McKenzie · UK

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