Founders of high-growth, innovative British companies will pay capital gains tax at 10% on up to £10m of lifetime gains under a new Founders' Relief announced by the Chancellor, John Healey, in Wednesday's Budget.
The rate applies when selling qualifying shares. It is targeted at founders and significant early investors, according to City AM, Portfolio Adviser and Investment Week. Portfolio Adviser quotes Healey's statement to the Commons referring to "the founders of our most successful firms".
At the same time, the lifetime limit for Business Asset Disposal Relief is halved from £1m to £500,000. Healey said this means "no change for three in four claimants", Investment Week reports. The Treasury also says three-quarters of existing claimants are unaffected. That figure has not been independently checked.
The headline rates of capital gains tax are unchanged at 18% for basic-rate taxpayers and 24% for higher and additional-rate taxpayers, despite speculation before the Budget.
City AM reports that founders have welcomed the package. Investors warn it is not enough without more growth capital.