Chancellor John Healey has confirmed the Autumn Budget will land on Wednesday 28 October 2026. For business owners who are weighing up a sale in the next year or two, it’s a date worth watching closely, as tax on business disposals has moved twice in the last eighteen months already, and the rumour mill suggests it isn’t finished.

Below is where things stand: the political backdrop, what’s actually being speculated about, and, because it’s one of the questions we get asked most, the full history of Business Asset Disposal Relief and what might happen to it next. As ever with Budget speculation, none of this is confirmed until the Chancellor sits down on the day, so treat it as context for planning conversations, not as advice to act on.

A new Chancellor, a new set of pressures

This will be the first Budget delivered under Prime Minister Andy Burnham, with John Healey as his Chancellor. New leadership usually means a genuine reset in direction, and Burnham has been open about his own view that the UK “taxes work more heavily than wealth” – a philosophy that puts capital gains, dividends, and wealth-related taxes squarely in the spotlight rather than income tax or VAT.

The fiscal backdrop hasn’t got any easier. Estimates of the gap the Chancellor needs to close range up into the low twenty-billions, driven by higher borrowing costs and existing spending commitments. Labour’s manifesto pledge not to raise income tax, employee National Insurance or VAT still stands, which narrows the options. And historically, when those three levers are off the table, capital gains tax, dividends, pensions and property are where governments look instead.

What’s actually being rumoured

A few themes keep coming up across the tax and advisory commentary:

• Capital gains tax is the biggest area of uncertainty. Burnham has previously said he wants to look at aligning CGT more closely with income tax rates. Full alignment would be a significant departure from how gains have traditionally been taxed in the UK, and nothing has been confirmed, but it’s the change advisers are flagging most consistently ahead of this Budget.
• Dividends may see higher rates or a smaller tax-free allowance, since dividend tax sits outside the “working people” manifesto pledge; the same logic that saw dividend rates rise in last November’s Budget.
• Pensions could face a cap on the National Insurance relief available on salary-sacrifice contributions, and a review of the 25% tax-free lump sum is being talked about again, as it has been ahead of several recent Budgets.
• Property owners and landlords may see tighter reliefs, and there’s speculation the £2 million threshold for the high-value council tax surcharge could be lowered to £1.5 million. Wider reform of council tax and stamp duty remains a longer-term debate rather than something expected in October.
• Inheritance tax is a genuinely mixed picture for business owners. There’s speculation the government could revisit April 2026’s changes to Agricultural and Business Property Relief, potentially softening them, given Burnham has indicated he wants to “look again” at how the farming community was affected. Nothing is confirmed, but it’s one of the few areas where the rumours point toward relief rather than restriction.
• Business rates support already announced; a 20% reduction for hospitality, leisure and retail, plus specific help for pubs, clubs and music venues looks set to continue, alongside talk of broader high street reform.

Business Asset Disposal Relief: how we got here

BADR is the relief that matters most directly to anyone selling a trading business, so it’s worth setting out the full history before looking at what might come next.

We’re not fans of Budget speculation, and we like it even less when it tips into scaremongering; a nervous owner is not a well-served owner. But BADR has a habit of changing with almost no notice, and changes tend to bite from the very next tax year. So, while we’re hoping for the best, we’d rather our clients were prepared for the worst.

• 2008 – Entrepreneurs’ Relief introduced, replacing the old taper relief system. Flat 10% rate of CGT on qualifying gains, up to a £1 million lifetime limit.
• 2010 (March Budget) – Lifetime limit raised to £2 million.
• 2010 (June emergency Budget) – Limit extended again to £5 million.
• 2011 – Limit increased to £10 million, where it stayed for nearly a decade.
• March 2020 – Lifetime limit cut sharply back to £1 million, and the relief was renamed Business Asset Disposal Relief. It’s been £1 million ever since.
• April 2025 – Rate increased from 10% to 14%, as legislated in the October 2024 Budget.
• April 2026 – Rate increased again to 18%, the second step of that same 2024 announcement.

So in less than two years, the effective tax rate on a qualifying business sale under BADR has gone up by 80% (from 10% to 18%), even though the £1 million lifetime limit hasn’t moved.

Last November’s Budget left BADR itself untouched, but did cut the CGT relief available on sales to Employee Ownership Trusts from 100% to 50% of the gain, closing off one of the routes some owners had been using as an alternative.

What might happen to it in October

Nobody is currently pointing to a specific confirmed change to BADR for this Budget, but the loudest speculation right now is about the main rate of CGT, not the relief itself. But the two are connected.

If ministers do move to align the headline CGT rate more closely with income tax, BADR’s 18% rate and its £1 million cap become the main thing standing between a business owner and a much larger tax bill on sale. That makes BADR a natural place to look if the government wants to claw back some of the revenue it would otherwise lose by protecting entrepreneurs, and it’s exactly the kind of relief that’s been narrowed twice already in the last six years.

What this means if you’re thinking about selling

Budget speculation is exactly that, speculation, and we’d never advise anyone to rush a sale purely on the back of a rumour. Deals done for the wrong reasons, at the wrong pace, tend to be the ones people regret.

But the pattern over the last two years is BADR has moved twice, always upward, always announced in the Budget and effective from the following April. If a sale is realistically on your horizon in the next twelve to eighteen months, it’s worth having the conversation now about timing, valuation and readiness, so you’re in a position to act on facts once the Chancellor actually stands up on 28 October, rather than reacting after the event.

If you’re already in process with heads of terms signed and working through due diligence, it’s less about speculation and more about momentum. Push to get to completion ahead of the Budget where that’s realistically achievable, make sure everyone at the table (you, the buyer, both sets of lawyers and accountants) is aligned on timeline and pulling in the same direction, and keep due diligence moving as efficiently as possible rather than letting it drift.

None of that means cutting corners; a rushed deal that unravels post-completion is worse than a clean one that lands in November. But a deal that’s ready to complete shouldn’t be left to run past a Budget it didn’t need to.

We’re not tax advisers, and nothing here should be treated as tax or financial advice – please speak to your accountant or tax adviser about your own position.

What we can help with is the practical side; an honest view of what your business is worth today, what buyers are active in your sector, and what a realistic timeline looks like if you decide the time is right.

Get in touch and we’ll talk it through.

The political commentary in this article is used for illustrative purposes only and does not reflect any political affiliation or endorsement on the part of Business Partnership. This insight is intended as general information, not formal advice. Every business and exit is different, so please seek tailored professional guidance before making any decisions.

Following today’s government budget announcement, significant changes to Business Asset Disposal Relief (BADR) were revealed. These changes will impact business owners looking to sell in the coming years, if not months. It would be fair to say that our team at Business Partnership expected these changes, however unwelcome they may be.

Starting in April 2025, business owners will see an increase in the capital gains tax (CGT) rates applied to BADR, which could substantially impact the proceeds from their business sale. To provide some clarity on today’s announcement, I wanted to break down what this all means for business owners and why selling sooner may be advantageous for those considering it.

Current BADR Framework: Up to £1M at 10% CGT

For business owners selling their businesses before April 2025, the current BADR setup allows for a reduced CGT rate of 10% on the first £1 million of lifetime qualifying gains. This relief is designed to reward entrepreneurs and long-term business owners, offering a substantial tax break for those looking to exit their businesses. Any gains beyond this £1 million threshold are currently taxed at the individual’s standard marginal CGT rate, which will likely rise to 24% for many due to recent rate changes.

April 2025 – April 2026: The Transition to a 14% CGT Rate

From April 2025, the first wave of changes to BADR will come into effect, with the CGT rate on the initial £1 million of lifetime gains increasing from 10% to 14%. While this may not seem drastic, this 4% increase represents a potentially significant additional tax burden for business owners looking to maximise the net proceeds of their sales.

For example, if a business owner realises £1 million in qualifying gains, the difference between paying 10% and 14% could mean an additional £40,000 in tax.

April 2026 Onward: 18% CGT Rate on Lifetime Gains Under BADR

The most substantial change occurs in April 2026, when the CGT rate on the first £1 million of qualifying lifetime gains under BADR is set to increase to 18%. This change effectively doubles the tax rate on these gains compared to the current rate, adding a considerable financial impact for business owners.

The progression from 10% to 18% over the next two years can represent a significant difference in the after-tax proceeds from a business sale, making it increasingly less advantageous to hold off on a sale if a business owner is nearing their exit.

Beyond BADR: Increased Rates on Excess Gains

Any gains exceeding the £1 million lifetime limit for BADR will continue to be taxed at the taxpayer’s marginal CGT rate. This rate has also seen increases, with the majority of taxpayers now facing a rate of around 24%. With higher CGT rates across the board, strategically planning the timing of a business sale becomes even more critical.

What This Means for Business Owners Considering a Sale

For business owners considering selling, these staged CGT increases make the next 18 months a critical period for planning. Selling before April 2025 allows business owners to benefit from the current 10% CGT rate on up to £1 million of qualifying gains. Delaying could mean losing out on a more favourable tax rate and potentially facing up to 80% higher tax on that initial £1 million of lifetime gains by April 2026.

Take Action: Secure Expert Guidance from Business Partnership

The government’s BADR changes highlight the importance of forward-thinking financial planning. For business owners who have been contemplating a sale, the window for benefiting from the current 10% CGT rate is closing fast. At Business Partnership, our team is ready to guide you through this evolving landscape and help ensure that your exit strategy is well-timed and optimised for maximum value.

We understand the intricacies of selling a business, including the financial, legal, and strategic considerations involved in timing the sale to maximise value. Our advisors can help assess your business’s position, evaluate the potential impact of these upcoming tax changes, and determine the best approach to move forward.