When the Chancellor delivered the Autumn Budget on 28 October, one headline for entrepreneurs was a new tax break: Founders’ Relief. Qualifying founders will pay just 10% Capital Gains Tax on up to £10 million of lifetime gains when they sell their shares. It sounds like a prize for anyone who builds a business. But read the small print and a different picture emerges, one that matters a great deal to Black-owned businesses in Birmingham.
The relief is aimed at fast-growing, innovative companies. Our community is full of ambitious founders, yet the funding that usually fuels that kind of growth has been far harder for us to reach. This guide explains what has been proposed, who is likely to benefit, and how you can make your voice heard before the consultation closes on 30 November.
What Is Founders’ Relief?
According to the government’s consultation page, Founders’ Relief is a new Capital Gains Tax relief that applies a 10% rate to qualifying share disposals, up to a lifetime limit of £10 million of gains per person. It is aimed at founders, and significant early investors, in high-growth, innovative UK companies. Legislation is due in Finance Bill 2026/27, and the relief would apply to qualifying disposals made on or after 6 April 2027.
For comparison, the main Capital Gains Tax rates stay at 18% and 24%, and the Business Asset Disposal Relief lifetime limit is reported to fall from £1 million to £500,000 from April 2027, with its rate unchanged at 18%. So the Budget rewards one kind of business owner more generously, and trims relief for another.
This is a proposal, not yet law. The details may change after the consultation, so treat everything below as the current direction of travel.
The Tests: Who Actually Qualifies?
The government has asked for views on three sets of conditions: individual, company, and growth and innovation. Based on a detailed analysis by accountants Price Bailey of the published proposals, the tests are demanding.
For the founder
- Hold at least 25% of the ordinary share capital, with matching voting and economic rights, when the trade (or preparation for it) began.
- Hold the shares for at least five years before selling.
- Be UK resident for at least five continuous tax years before the sale.
For the company
- A trading company with a substantial UK presence for the five accounting periods before the sale.
- Turnover of at least £10 million in the period before the disposal.
- At least 15 qualifying full-time employees, meaning people working 35 hours or more a week and paid at least the National Minimum Wage. Directors, contractors and agency workers do not count.
The growth tests
The company must also pass two of three growth tests: average turnover growth of 25% a year over three consecutive periods starting from at least £10 million, growth in employee numbers, or at least £1.5 million of qualifying R&D spending with R&D relief claimed.
Put simply, this is a relief for a very specific kind of company: young, fast-scaling and often technology or research-led. The Institute for Fiscal Studies’ director, Helen Miller, told the Treasury Committee it is a “dreadful” policy that rewards only established entrepreneurs and could push founders to sell soon after strong growth. The government’s own cost estimate is £1.3 billion between 2027/28 and 2031/32, with an average windfall of around £500,000 per founder. Not every expert agrees: reporting notes that 47% of ICAEW members view it positively. But even supporters warn that strict eligibility rules may limit its reach.
Why This Matters for Black Founders Specifically
The funding gap shapes who can scale
A relief that rewards rapid, funded growth lands differently in a community that has had less access to the funding that makes rapid growth possible. Research by Extend Ventures, reported by Sifted, found that teams of Black entrepreneurs received just 0.24% of UK venture capital between 2009 and 2019, across 38 businesses. Black and multi-ethnic communities make up 14% of the UK population but received 1.7% of capital at all stages. A separate 10X10 and Google report found that 88% of Black founders used their own money or funding from family and friends. Those figures are several years old, and the picture may be improving, but more recent work cited by the UK Business Angels Association still puts Black founders at 1.6% of UK venture capital rounds over the past decade.
If you have built your business on savings, a loan from family and steady trading income, you may be doing everything right and still not meet a test built around £10 million turnover and 25% annual growth. That is not a judgement on your business. It is a feature of how the rules are drawn.
The wealth gap and the 25% rule
The founder test looks back to who held shares when the business started. Many Black-owned businesses are family ventures where ownership shifted over time, or were launched with partners who brought in different amounts of money. A founder who started with 20% rather than 25%, or who bought into the business later, could miss out under the proposed wording. How the rules treat later buy-ins, reorganisations and family transfers is still being consulted on, which is exactly why input matters.
Ambition is not the problem
The British Business Bank’s Small Business Finance Markets 2025/26 report found that 71% of ethnic minority-led businesses have a long-term ambition to grow, compared with 40% of white-led businesses, while 22% see access to external finance as a major obstacle, more than twice the share of white-led businesses. Note that this covers ethnic minority-led businesses as a group, not Black-led firms alone. The takeaway is the same: our ambition is not the missing ingredient.
Other Budget Measures Worth a Look
Founders’ Relief is not the only change. According to a SeedLegals summary of the Budget, you should also be aware of:
- Business rates: for qualifying retail, hospitality and leisure businesses in England, the 100% relief threshold is reported to rise from £12,000 to £18,000 rateable value from 1 April 2027, with partial relief up to £21,000. If you run a shop, salon, restaurant or similar premises in Birmingham, check your rateable value.
- National Minimum Wage: reported to rise by 3.9% from April 2027, so the rate for those aged 21 and over goes from £12.71 to £13.21. Factor this into your pricing and payroll.
- Employee share schemes: changes to EMI and a renamed EMI2 scheme from April 2027, which may help if you want to reward staff with shares.
- Young Entrepreneurs Allowance: a pilot offering living-cost support in a business’s first year. Eligibility and how to apply have not yet been announced, so watch this space.
Check the official Budget documents on GOV.UK for the final detail on each of these.
What You Can Do Now
1. Respond to the consultation
The Founders’ Relief technical consultation closes at 11:59pm on 30 November 2026. You can respond by emailing EnterpriseTax@hmtreasury.gov.uk. You do not need to be a tax expert. Simple, real-world points count: How would the 25% founding-share rule work for a family business? Would a five-year holding period fit a business that took years to get investment? Should a turnover threshold of £10 million apply to businesses that grow steadily but not explosively? If you are part of a Black business network, consider submitting a joint response so that the community’s experience is on record.
2. Understand which relief might apply to you
- If you expect to sell a business or shares in the next few years, ask an accountant whether Founders’ Relief, Business Asset Disposal Relief or neither is likely to apply.
- Remember the lifetime limit for Business Asset Disposal Relief is reported to be falling to £500,000 from April 2027. If a sale is planned, timing could matter, so get advice before acting.
- Do not restructure your ownership just to chase a relief. Anti-avoidance rules are expected, and a poorly advised change can cost more than it saves.
3. Tidy your records and shareholding
- Keep a clear record of who held what shares on the day your business began trading.
- Make sure your shareholder agreements and Companies House filings match reality.
- Track turnover, headcount and any R&D spending year by year. These figures matter for relief, for lenders and for investors.
4. Look beyond tax for growth capital
Tax relief only matters at the point of sale. Getting there needs finance. Look at what is available through the British Business Bank’s Growth Guarantee Scheme via accredited lenders, programmes run by Black business organisations, and local support from Business Growth West Midlands. Check each programme’s current eligibility and deadlines before you rely on it.
5. Build your network
The founders who benefit most from reliefs like this are those who know about them early and have advisers in their corner. Share what you learn with other owners, and ask the questions others may be afraid to ask. Collective knowledge is one of our biggest strengths.
Questions Black Founders Are Asking
Is Founders’ Relief law yet?
No. It is a proposal subject to consultation, with legislation expected in Finance Bill 2026/27 and a start date of 6 April 2027 for qualifying disposals.
I run a small, steady business. Does this apply to me?
Probably not under the current proposals. The reported tests, including £10 million turnover and strong growth, are aimed at scale-ups. Business Asset Disposal Relief, which has a lower cap from April 2027, is more likely to be relevant. Speak to an accountant.
Why should I respond to the consultation if I will not qualify?
Because rules are shaped by the voices that reach the Treasury. If the people who build businesses in communities like ours do not respond, the rules will reflect everyone else’s experience.
Conclusion
Founders’ Relief may well help a small number of high-growth founders, but on current proposals it is a narrow door. For Black entrepreneurs in Birmingham, where access to growth capital has lagged far behind ambition, the real question is not only whether you can walk through that door but whether the door is built for businesses like ours. You can help answer that before 30 November. Respond to the consultation, get advice on your own position, keep clean records, and share what you learn.
This article is general information, not tax, financial or legal advice. The measures described are proposals and may change. Check GOV.UK or speak to a qualified adviser about your own circumstances.
Join the Conversation
Are you planning to scale or sell your business? Does the Budget change your plans? Join the Black Owned Birmingham Facebook group to share your experience, swap questions and help each other respond to the consultation.
