Selling shares in your business, 2026 Budget, post 2026 Budget

Summary

Selling shares in your business, what does the Budget 2026 mean for business owners?

For business owners thinking about selling shares in their business, bringing in a new investor or eventually passing the company to the next generation, Budget 2026 provides another reason to start planning well before a transaction is on the table.

The Budget contains a mixture of measures for entrepreneurs. Most notably, the Government has announced a new Founders’ Relief, while at the same time reducing the lifetime limit for Business Asset Disposal Relief (BADR). It has also indicated that it intends to modernise the taxation of company distributions while seeking to protect genuine commercial transactions, including family business successions.

From a commercial law perspective, the message for business owners is clear: how you structure your company, its shareholdings and an eventual exit or succession can matter significantly.

Are you considering selling shares in your business?

There are many reasons why a shareholder may decide to sell. You may be planning a complete exit, selling part of your holding to an investor, completing a management buyout or starting to realise some of the value you have built up over many years.

Budget 2026 has brought these decisions into sharper focus.

The Government has announced that the lifetime limit for BADR will reduce from £1 million to £500,000. BADR currently provides an 18% Capital Gains Tax rate on qualifying gains following the rate increase that took effect in April 2026.

At the same time, the Government is introducing Founders’ Relief. The proposed relief will provide a 10% rate of Capital Gains Tax on qualifying disposals of shares, on lifetime gains of up to £10 million per individual, for qualifying founders and significant early investors in high-growth, innovative UK companies. It is intended to apply to qualifying disposals from 6 April 2027, although the detailed conditions are currently the subject of consultation.

That distinction is important. Founders’ Relief should not be viewed as a straightforward replacement for BADR that will be available to every owner-managed business. The Government’s consultation specifically focuses on founders and significant early investors in high-growth, innovative companies, with detailed individual, company, growth and innovation conditions still being developed.

Business owners considering a sale should therefore obtain specialist legal and independent tax advice on which reliefs may be available and legal advice on the structure and terms of the transaction.

Preparing your business for a share sale

Tax is only one part of selling shares in your business. A prospective buyer will want to know exactly what they are acquiring and will usually carry out extensive due diligence before completing a transaction.

Issues with shareholder agreements, company records, intellectual property rights, key commercial contracts, employment arrangements, or historic corporate decisions can all become obstacles during negotiations. At best, these issues can slow a transaction down. At worst, they can affect the value a purchaser is prepared to pay or the contractual protections they require from the sellers.

Preparing early gives owners an opportunity to identify these issues before a buyer does.

The transaction itself also needs careful consideration. Is the owner selling all of their shares or retaining a minority interest? Will some of the consideration be deferred? Is there an earn-out? What warranties and indemnities will the seller be expected to provide? Will the founder continue working in the company following completion?

These are questions that can have a significant bearing on both the value and risk attached to an exit.

What about passing your business to the next generation?

Selling is not the only route to an exit. For many family business owners, passing the business down to the next generation may be preferable to selling to an external purchaser.

The Budget is particularly interesting in this respect because the Government has said changes to the taxation of company distributions should protect genuine commercial transactions, including families passing their businesses to the next generation.

That recognition is welcome, but succession remains something that should be planned carefully and well in advance.

Passing ownership and passing management control are not necessarily the same thing. A founder might transfer shares gradually while staying involved in running the company. Alternatively, different family members might take different roles, with some actively involved in management and others retaining only an economic interest.

A carefully drafted shareholders’ agreement and appropriate changes to the company’s articles can help establish how the business will operate following a transition, including decision-making, dividend policies, transfers of shares and what happens if shareholders disagree.

Succession planning should therefore consider not simply who receives the shares, but how the company will work once they do.

Start planning before you are ready to sell

One of the biggest mistakes an owner can make is waiting until a buyer has already approached them before thinking seriously about their exit.

Budget 2026 reinforces the value of planning early. Tax rules can change, reliefs have detailed qualifying conditions and a company’s ownership, and corporate arrangements can take time to reorganise.

The same applies to succession. If the ambition is ultimately to keep a family business within the family, putting the legal structure in place early can help create a smoother transition and reduce the potential for uncertainty or disputes later.

At Blake Turner LLP, we advise shareholders and business owners on company sales, share transactions, corporate reorganisations and succession arrangements. We can work alongside your accountants and tax advisers to ensure that the legal structure of a transaction supports your wider commercial and personal objectives.

If you are considering selling shares in your business, bringing in an investor or passing your business to the next generation, speak to our Corporate & Commercial team about planning your next steps. Contact Blake Turner LLP today, our dedicated team of Commercial Lawyers in our London office are ready and waiting to help.