Budget 2026: changes for entrepreneurs
In his first Budget on 28 October 2026, Chancellor of the Exchequer, John Healey made several announcements relevant to entrepreneurs and small business owners.
29 Oct 2026
In his first Budget on 28 October 2026, Chancellor of the Exchequer, John Healey made several announcements relevant to entrepreneurs and small business owners.
Recent years have seen an increase in the rate of capital gains tax (CGT) on gains qualifying for Business Asset Disposal Relief (BADR) from 10% to 18%. Budget 2026 further limited the value of BADR by halving the amount of lifetime gains qualifying for the relief from £1 million to £500,000 for disposals made on or after 6 April 2027.
Instead, a new CGT relief called Founders' Relief will be introduced for founders of and significant early investors in high-growth, innovative UK companies. The relief will apply a 10% CGT rate to qualifying disposals of shares up to a lifetime limit of £10 million of gains per individual.
Changes were also made to help entrepreneurs just starting out. From 6 April 2027, the Trading Allowance will increase from £1,000 to £3,000; where the allowance covers all income before expenses, the individual will not have to declare or pay tax on this income. For young entrepreneurs, the government will shortly pilot a Young Entrepreneurs Allowance, providing successful applicants with support towards their living costs during the first year of their business.
The government also confirmed that the previous increase to simplified mileage rates applicable to the self-employed to 55p per mile for business mileage up to 10,000 miles would be made permanent and the rate for mileage over 10,000 would also be increased from 25p to 35p per mile.
Responding to the Budget, Jonathan Geldart, Director General of the Institute of Directors, said:
'We very much welcome the numerous measures intended to support British start-ups and scale-ups, such as the new Founders' Relief, Young Entrepreneurs Allowance and EMI2 share incentives (as well as support for small brewers).'
Josh Toovey, Head of Policy and Research at IPSE, also welcomed the changes but said 'there is still a long way to go'.
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