Budget 2026, delivered on 28 October 2026, gives UK founders a 10% Capital Gains Tax rate on up to £10 million of lifetime gains, doubles the EMI2 share option limit to £120,000 and adds £5 billion to the British Business Bank.

Most of it starts on 6 April 2027 and needs Finance Bill 2026-27 to pass first. Here is what the Budget document says for startups, with the paragraph numbers so you can check each one.

Founders' Relief: 10% CGT on £10 million, but BADR is cut in half

From 6 April 2027, a new Capital Gains Tax Founders' Relief gives "a 10% CGT rate on up to £10 million of lifetime gains for qualifying founders of high-growth, innovative companies" (paragraph 6.257). A technical consultation on the detailed design opened with the Budget, so who counts as a qualifying founder is not settled yet.

The cost to the Treasury is put at £260 million in 2027-28, rising to £300 million by 2031-32 (Table 6.1, row 26).

The other side of the deal is Business Asset Disposal Relief. The lifetime limit on gains eligible for BADR, which gives an 18% rate, drops from £1 million to £500,000 for disposals from 6 April 2027 (paragraph 6.261). The Budget says three-quarters of BADR claimants will still get relief on their entire gain.

Founders who sell a business that does not meet the Founders' Relief test, and whose gain is above £500,000, will pay more than they would today.

What the Budget does not do matters too. There is no increase in the main Capital Gains Tax rates, no move to align CGT with income tax, and no exit tax on founders who leave the UK. None of these appears anywhere in the document.

EMI2: option limit doubled to £120,000

The Company Share Option Plan is being renamed EMI2 and expanded from 6 April 2027 (paragraph 6.255). The individual option limit goes from £60,000 to £120,000, the exercise period moves from 10 to 15 years, and the overlap with the EMI limit is removed so eligible employees can hold the full amount under each scheme.

The Budget frames EMI2 as the option for "growing companies that have moved beyond EMI or are not eligible for EMI".

EMI itself gets three changes from the same date (paragraphs 6.258 and 6.260). The exercise window after a disqualifying event goes from 90 to 180 days. Companies moving to an Employee Ownership Trust keep EMI access. And the separate notification for each option grant is scrapped, with grants reported through the existing end-of-year return instead.

Share options are already the main currency for UK tech pay. OpenAI's UK accounts showed £258m paid to 110 staff, mostly in share options, and the higher EMI2 limit is aimed at companies competing for the same people.

£5 billion more for the British Business Bank

The BBB gets an extra £5 billion of capacity, taking its total to £30.6 billion (paragraph 4.46). The Budget splits it into a £6.5 billion expansion of the Growth Guarantee Scheme, £1.4 billion of new commitments in commercial equity, £165 million for community lenders and £450 million for a new venture debt product.

The venture debt product is described as "non-dilutive finance to innovative firms" (paragraph 4.101). The BBB has already been putting money into fund managers this year, including £180m across six AI and deeptech funds.

The Budget also repeats the Mansion House Accord figure of around £25 billion of pension money expected to flow into UK private markets, and says the BBB has a pipeline of over £100 million of commitments to women-led funds.

R&D tax relief and the venture capital schemes

The R&D tax credit Claim Notification Form is removed from 1 April 2027, and the Additional Information Form is simplified from autumn 2027 (paragraph 6.253). Both changes are costed at £45 million in 2027-28.

For SEIS, EIS and VCTs, the Budget promises "a small number of technical changes" in Finance Bill 2026-27, tighter guidance and compliance on excessive fees, and work on the Advance Assurance service (paragraph 6.256). No rate or limit changes are listed.

Small measures for first-time founders

The Trading Allowance triples from £1,000 to £3,000 from 6 April 2027 (paragraph 6.254), so side projects and early sales up to that amount are tax-free. That matters to the people in Bizztor's guide to starting a business while working full time who are testing an idea before leaving a job.

A Young Entrepreneurs Allowance will be piloted in England, giving successful applicants help with living costs in the first year of their business (paragraph 6.126). No amount, age range or start date is given.

Scale UK is a new single route into existing government growth programmes. Its regional pilot, Scale UK Connect, will give "tailored support to 200 high-growth firms across the UK" (paragraph 4.105).

Hiring: non-competes, wages and visas

The government confirms it will legislate so that non-compete clauses "do not prevent startups and scaling firms from hiring" (paragraph 6.93), following the consultation on non-compete clauses reported earlier this year. A detailed position comes in early 2027 before legislation.

The National Living Wage rises 3.9% to £13.21 an hour on 1 April 2027 (paragraph 6.128). The £2,000 apprenticeship hiring payment for non-levy employers taking on young apprentices, announced in spring, is restated.

For hiring from abroad, the Budget sets out six changes:

  • The High Potential Individual visa expands to graduates of the top 150 global institutions, with a bigger cap (paragraph 6.96).
  • The Graduate visa will be two years for graduates of "high-compliance universities where there are strong labour market outcomes" (paragraph 6.97). It is otherwise due to fall to 18 months from 1 January 2027. NARA Solicitors has a breakdown of the graduate visa and curtailment changes for students and sponsored workers.
  • The Global Talent visa's endorsed funder pathway grows: UKRI will identify more R&D-intensive businesses in Industrial Strategy sectors to act as host organisations by spring 2027 (paragraph 6.132). More than 100 businesses are already on it.
  • Sponsored worker salary thresholds move from the median to the 25th percentile of wages for each occupation from spring 2027, with the PhD discount removed (paragraph 6.94).
  • The highest skilled sponsored workers get up to six months, rather than the current 60 days, to find a new job if they lose one, from 2027 (paragraph 6.95).
  • An employer's payment of the Immigration Skills Charge or Certificate of Sponsorship fee stops being a taxable benefit in kind, for payments from 28 October 2026 (paragraph 6.15).

AI money: £140 million more for Sovereign AI, plus security spending

The Budget adds £140 million to the Sovereign AI Unit "to back promising UK AI companies to scale and succeed here". That splits into £60 million more direct investment for the £500 million Sovereign AI Fund between 2027-28 and 2029-30, with a new focus on physical and industrial AI (paragraph 6.99), and £80 million for its challenge-led R&D procurement scheme (paragraph 6.105).

Around it sit £120 million for the AI Security Institute, £40 million for a new National Agentic Security Unit to detect and respond to misaligned agentic activity (paragraph 6.106), £15 million for local AI adoption partnerships and a £138 million quantum sensing procurement commitment. A Chancellor's AI Challenge Prize starts with the NHS and a top award of up to £2.5 million.

For AI startups the practical routes in are the Sovereign AI Fund, which has already backed companies such as Augur in threat detection, and the procurement scheme, which pays companies to solve named public sector problems rather than taking equity.

What this means for UK founders

The headline numbers are large, but the dates matter more. Nothing on this list is in force today. The tax measures need Finance Bill 2026-27, the visa measures need a Statement of Changes to the Immigration Rules, and Founders' Relief is still out for consultation on its design.

A founder planning an exit in the next 18 months faces a real choice. Sell before 6 April 2027 and BADR covers £1 million at 18%. Sell after, and either Founders' Relief applies at 10% on up to £10 million, or BADR applies on only £500,000. Whether you qualify for the first depends on rules that have not been written.

Read the full document: Budget 2026, HM Treasury, HC 726, 28 October 2026 (PDF). The costings are in Table 6.1 and the entrepreneurship measures are at paragraphs 4.96 to 4.111. All Budget papers are published on GOV.UK official documents.