The Budget backed startups and founders who sell up. We asked Linda Hardy, CEO of Business Leader, what’s missing for mid-sized firms.
- Founders’ Relief will set a 10% Capital Gains Tax rate on up to £10m of lifetime gains from April 2027, but the eligibility rules are still in consultation.
- Linda Hardy says the Budget favoured startups and founders who sell up, with £20bn for the British Business Bank and National Wealth Fund the main commitment for scaling firms.
- Under the proposals, founders would need a 25% stake from day one, £10m turnover and 15 full-time staff. The consultation closes on 30 November
Chancellor John Healey’s first Budget had plenty for people starting out: business rates relief widened, the trading allowance tripled, and a new Founders’ Relief promised a lower Capital Gains Tax bill for eligible founders.
But for Linda Hardy, CEO of Business Leader, the firms further along were an afterthought. Mid-market companies employ a quarter of the UK workforce, yet she says many are struggling with regulation and access to capital, and the Budget left them waiting for detail.
Here’s what Hardy made of the Budget, and what founders hoping to benefit from the new relief can do now to prepare, while the rules are still in consultation.
Founders’ Relief is welcome, but it’s not built for scaling firms
The Budget’s big offer for entrepreneurs was Founders’ Relief. It sets a 10% Capital Gains Tax rate on up to £10 million of lifetime gains for eligible founders of high-growth, innovative companies. However, it doesn’t start until April 2027, and the eligibility rules are still being consulted on.
When I sat down with Linda Hardy from Busines Leader, she told me the Chancellor’s pitch wasn’t a new one. It’s “common to hear a UK chancellor talking about the need to support those starting a business”, she explains. Healey “continued that tradition” with changes to small business rate relief and the new Founders’ Relief.
On rates, the threshold for retail, hospitality and leisure properties in England rises from £12,000 to £18,000 from April 2027.
Both are welcome, Hardy says, but they mostly help firms at the start of their journey, or when a founder sells up. “What’s still missing though is the explicit support that scaling businesses need.”
Professor Ross Brown of St Andrews Business School agrees, and says the gap comes at a cost. On the day of the announcement, he warned us that “too many firms are grown in the UK but get acquired by overseas firms due to insufficient domestic scale-up funding”.
Hardy thinks getting this right would be worth it. She told us that NatWest research found that even 1% growth in the UK’s mid-market could add £35bn to the economy by 2030.
But opportunity alone won’t get it done, and the Budget’s promises for growing firms came with little detail to act on.
Warm words, but where are the rates and thresholds?
So what would help? Hardy says many scaling firms are “struggling with regulations and access to capital”, and fixing that “could unleash growth”. The Chancellor did announce £20bn for the British Business Bank and the National Wealth Fund, which she calls welcome.
Yet that was one of the few firm commitments. Pledges of more consistent taxation of profits, protection for family business succession, and a general championing of AI were, according to Hardy, “all promised without rates, thresholds or guidelines”. The proposed audit exemption for medium-sized companies wasn’t confirmed either.
“Though the Chancellor acknowledged the important role that fast-growth companies play in our economy, warm words are no substitute for policy,” she told us.
There’s a question of tone, too. “Healey spoke about fast-growth companies, but not to them directly, and that’s a real miss,” she says. Her team will be “looking closely at the details of what’s been said today”, because leaders “will need those specifics to feel confident about investing, hiring and expanding.”
For now, Hardy’s message is simple: scaling firms need specifics, not more warm words. Founders hoping to benefit from Founders’ Relief don’t have to wait, though. The Treasury’s proposed rules are enough to start preparing.
The rules are still in consultation, so nothing is final. Yet, the Treasury has set out its proposed criteria, and founders can start checking where they stand.
- Check your stake: You’d need 25% of the company’s ordinary shares from when trading began, held for at least five years, and five continuous tax years of UK residency before the sale. Dig out your share register.
- Check your numbers: The company needs £10m turnover and 15 full-time employees in the year before the sale. Directors and contractors don’t count. That could rule out firms at the lower end of the mid-market.
- Find your records: Claims go through Self Assessment, and evidence could stretch back up to ten years. Hold on to accounts, payroll and R&D paperwork.
