Budget 2026: what owners selling a business should know before Wednesday

The Chancellor delivers his first Budget on Wednesday 28 October, and the measure most likely to affect owners planning a sale is already in the headlines: Business Asset Disposal Relief.

What’s been reported

According to The Telegraph, Business Asset Disposal Relief (BADR), the tax break most owners rely on when they sell, could be significantly scaled back in Wednesday’s Budget. Several outlets have followed the story, describing it as a relief worth around £1 billion a year.

The reports suggest the money saved could be redirected towards founders who reinvest in new UK businesses. The Observer has reported that options considered include a “repeat entrepreneur relief” for founders who reinvest their sale proceeds, and a lower capital gains tax rate for founders of very high-value companies.

Separately, the Chancellor is reported to have ruled out a general rise in capital gains tax. A change to BADR would be a targeted measure rather than a broad rate rise.

None of this is confirmed until the Chancellor stands up on Wednesday. Pre-Budget reports are often accurate in direction but wrong in detail.

What BADR is worth today

If you qualify, BADR reduces the capital gains tax rate on up to £1 million of lifetime gains from selling your business. Since 6 April 2026, that reduced rate has been 18%.

The standard capital gains tax rates are 18% for gains within the basic rate band and 24% above it. So for most owners selling a business, who will be higher-rate taxpayers on a sale of any size, BADR is now worth up to 6 percentage points on the first £1 million of gains: a maximum saving of around £60,000 compared with paying 24%.

That’s less than it used to be. Before April 2025 the BADR rate was 10%, and the relief has been cut twice since. Last year’s Budget also halved the capital gains tax relief on sales to employee ownership trusts, from 100% to 50% of the gain.

What could change

Until the detail is published, these are the broad possibilities owners and advisers are discussing:

The lifetime limit is reduced below £1 million, shrinking the amount that benefits. The rate is raised to match the standard 24% rate for some or all gains, removing most of the benefit. The qualifying conditions are tightened, for example longer ownership periods or a larger minimum shareholding. The relief is replaced with a new incentive linked to reinvesting proceeds in another UK business.

Any of these would mainly affect owners selling at a gain of up to £1 million, or using the relief on top of a larger sale.

The timing question

The obvious worry for anyone mid-sale is whether to rush to complete before Wednesday. Be careful:

Changes can take effect immediately on Budget day, with no transition period. When capital gains tax rates rose in the October 2024 Budget, the main rate change applied from the day of the announcement. For capital gains tax, a disposal usually happens when a contract becomes unconditional, not when the money arrives. Contracts already exchanged may be treated differently from deals still in negotiation, and the 2024 Budget included anti-forestalling rules aimed at deals structured to beat a rate change. A sale rushed for tax reasons can cost far more than the relief is worth, through a weaker price, poorer terms or skipped due diligence. What to do this week If you’re mid-deal, call your adviser before Wednesday. Ask where your deal stands for tax purposes, whether any contract is unconditional yet, and what a change on Budget day would mean for your net proceeds. Don’t sign anything in a rush. A worse deal done quickly to save a few percentage points of tax is rarely a good trade. Check you actually qualify today. BADR has conditions, including a minimum 5% shareholding and being an officer or employee of a trading company for at least two years before the sale. If you don’t qualify now, a change makes no difference to you. Look at the bigger picture. For family businesses, inheritance tax relief on business assets changed in April 2026. If you’re weighing a sale against passing the business on, your adviser should look at both together. Watch the detail, not the headline. The fine print, including start dates and transitional rules, will matter more than Wednesday’s announcement. What happens next

We’ll publish a full breakdown of what the Budget means for owners selling or handing over a business once the documents are released on Wednesday afternoon. If you’re not already subscribed, sign up for the weekly briefing to get it in your inbox.

This article reflects reports published before the Budget and was written on 25 October 2026. Exit Index provides general information, not financial, legal or tax advice. Speak to a qualified adviser about your own circumstances.