London, 28 October 2026: The Autumn Budget risks undermining the Government’s ambition to help British entrepreneurs start, scale and stay in business, sending mixed messages with changes to the tax framework, PensionBee has warned.
From April 2027, the lifetime limit on capital gains eligible for Business Asset Disposal Relief (formerly known as Entrepreneurs’ Relief) will be cut from £1 million to £500,000. While the Government says three-quarters of claimants will still receive relief on their entire gain, PensionBee cautions that the change risks increasing the tax burden on some business owners, investors, and employees who have participated in creating successful British ventures. The changes may discourage investors from investing in new businesses and employees from taking on senior roles in young, innovative companies.
At the same time, the Government will introduce a new Founders’ Relief, providing a 10% CGT rate on up to £10 million of lifetime gains for qualifying founders of high-growth, innovative companies from 6 April 2027. PensionBee believes supportive tax incentives should be available broadly and that the beneficiaries of Founders’ Relief need to be appropriately outlined so as to continue to encourage success in the overall ecosystem for entrepreneurship.
The government will also increase the Company Share Option Plan (CSOP) individual option limit from £60,000 to £120,000, removing the interaction with the Enterprise Management Incentive (EMI) option limit, allowing eligible employees to receive the full amount of options available under each scheme. However, EMI tax benefits may be curtailed by the reduction in BADR and the government should clarify whether EMI option holders will also benefit from increased entrepreneurship allowances and incentives.
Lisa Picardo, Chief Business Officer UK at PensionBee, said: “The Government says it wants to help entrepreneurs start, scale and stay in Britain, but the Budget sends a mixed message. Building a successful business takes years of hard work, personal risk and investment. The tax system should support that ambition and give entrepreneurs and businesses the confidence to build for the long term - and that means stopping slicing allowances that should be safe for the long-term.
“On one hand, whilst moves towards Founders’ Relief, providing 10% Capital Gains Tax on £10m of lifetime gains and the expansion of the Company Share Option Plan (CSOP), may be good headlines, reducing the lifetime limit for Business Asset Disposal Relief from £1 million to £500,000 from April 2027 risks increasing the tax bill for business owners, investors and employees when they come to crystallise their gains, and may have unintended consequences. Those affected by the change could face a higher bill at the point they realise the value of years of work.
“Supporting innovation should mean recognising the importance of both Founders starting a business, employees who drive its growth, and investors who help it scale - enabling all to benefit from success at all stages of the journey.”
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