Key impacts from the UK 2026 budget for Growth Companies, Entrepreneurs, Founders and Start-ups
- Founders’ Relief: A new 10% CGT rate for disposals by founders and early investors of shares in high-growth, innovative UK companies from April 2027.
Impact: Founders of fast-growing companies or those which have incurred significant R&D expenditure in the last 10 years are likely to be entitled to a significant tax break when selling their business.
- EMI 2: CSOP is to be significantly expanded with a headline limit of £120,000 per option holder and renamed as “EMI 2”.
Impact: As with CSOP, EMI2 will be subject to much less in the way of restrictions and, with the significant market value increases, this should greatly expand the possible use of the scheme as a viable alternative to EMI.
- Distributions from companies: Following a 2026 consultation, the government now intends to reform the framework for tax on company distributions.
Impact: The changes are targeted at capital reductions, but could have more far-reaching impacts and affect all shareholders who have control over how profits are distributed. Draft legislation will follow in 2027.
- BADR and CGT rates: Reduction of BADR threshold to £500k but no change to headline CGT rates.
Impact: The maximum value of BADR will fall to £30,000, though this could still be of interest in the context of EMI schemes.
Download our snapshot of the key takeaways.
Key impacts from the UK 2026 budget for Real Estate and Property
- Income Tax for Property: Rates outside Scotland were to increase by 2 percentage points from April 2027, now to increase by 4, so basic rate of income tax for property will be 24%.
- SDLT LGPS pooling relief: A new relief from SDLT has been included for local government pension fund pooling vehicles as a result of pension scheme reforms requiring LGPS pooling.
- VAT for social housing: A new VAT relief will be introduced for sales to registered providers of social housing before “golden brick”, allowing earlier access to grant funding.
- SDLT for assured tenancies: The abolition of assured shorthold tenancies in May risked new periodic assured tenancies slipping into SDLT. This change, backdated to May, removes the charge.
- SDLT group relief: A loophole exploited by a recent avoidance scheme which HMRC lost on in court, involving the liquidation of a parent company, has been removed with effect from 29 October.
- Sovereign investors taxed: Sovereign wealth funds and others who benefit from sovereign immunity from UK tax will be subject to UK tax, but will be given special access to the UK REIT regime.
- Mansion tax: The “high value council tax surcharge” in England will apply to homes worth over £2m from April 2028, with the tax rate doubled for houses which have been vacant for a year.
- Reporting of property income: The government intends to require letting agents and tenancy deposit protection schemes to start reporting residential property income, likely multiple times a year, to HMRC.
Download our snapshot of the key takeaways.
Key impacts from the UK 2026 budget for Employment Incentives
- CSOP/EMI2: CSOP is being rebranded by the Government as "EMI 2", and from 6 April 2027, the individual CSOP limit will double to £120,000, the exercise period will extend to 15 years, and CSOP options will no longer count towards an individual’s EMI limit.
Impact: CSOP/EMI 2 could become a more credible alternative where EMI is unavailable, while allowing both plans to support businesses as they grow.
- Greater Flexibility For EMI: From 6 April 2027, the post-disqualifying event exercise window will increase to 180 days, alongside changes supporting EOT transitions and simpler grant reporting.
Impact: EMI should become easier to manage through corporate events, ownership changes and ongoing administration.
- Business Asset Disposal Relief: From 6 April 2027, the BADR lifetime limit will reduce from £1 million to £500,000, although shares acquired through qualifying EMI options will continue to benefit from the more flexible BADR qualifying conditions, including no 5% minimum shareholding requirement.
Impact: The reduced limit makes BADR less valuable on exit, but its more accessible qualifying conditions remain an important advantage of EMI.
Download our snapshot of the key takeaways.
Next steps
If you would like to discuss the implications of the UK Budget 2026 for your business in more detail, please contact a member of our team.
Our Tax and Structuring team offers broad expertise, combining technical experience with sector understanding across multiple industries, including financial services, real estate and private equity. With teams based in the UK, Germany, France, Ireland, Luxembourg, Poland and Spain, they have vast experience on both domestic and cross-border matters.
