Autumn Budget 2026: Enhanced employee share incentives and new tax relief for business sellers

Today, 28 October 2026, John Healey delivered his first Autumn Budget as Chancellor of the Exchequer. After much speculation in the press about the potential changes that may be introduced, the Budget, on the whole, paints a positive picture for employee share incentives.

Have there been any changes to the main Capital Gains Tax (CGT) rates in the Autumn Budget 2026?

No changes announced to the headline CGT rates. The basic rate remains at 18% and the higher rate remains at 24%.

Have there been any changes in the Autumn Budget 2026 which affect employee ownership trusts (EOT)?

No changes to the EOT tax reliefs were announced. EOTs therefore continue to benefit from 50% relief on the headline capital gains tax rate. For most individuals, this gives an effective tax rate of 12% on shares sold to an EOT.

Employees of EOT-owned businesses continue to be eligible for potential income-tax-free bonuses of up to £3,600 per employee per year.

The Budget confirmed that Enterprise Management Incentive (EMI) share schemes continue to be available for businesses owned by EOTs.

What changes have been made to share schemes in the Autumn Budget 2026?

EMI2 (previously CSOP)

The government has expanded its tax-advantaged employee share option schemes offering.

Company Share Option Plans (CSOP) have been renamed EMI2 schemes to reflect how EMI and CSOP schemes interact. EMI has strict qualification requirements which mean some businesses do not qualify, while others may cease to qualify during their lifetime. EMI2 schemes have more lenient qualification requirements and can therefore often be used where a company does not qualify for EMI options.

CSOPs were subject to an individual value limit of £60,000 at the date of grant. For EMI2 this limit will be increased to £120,000.

The government has also increased the total value of tax-advantaged share options an individual can hold. Previously, the combined individual limit was £250,000. From April 2027, the EMI2 £120,000 limit can be used in addition to the EMI £250,000 individual limit, allowing an employee to hold tax-advantaged options of up to £370,000.

The period during which an EMI2 option can be exercised has increased from 10 years to 15 years, bringing it into line with the EMI limit. The longer exercise period gives employees a greater chance of being able to realise their share options.

All the above changes come into effect from 6 April 2027.

These are positive changes which should enable more employees to take advantage of tax-advantaged share options.

Enterprise Management Incentives (EMI)

A change has also been introduced for EMI schemes. Currently, under the legislation, an employee can keep their income tax relief if they exercise their options within 90 days of a disqualifying event (e.g. leaving employment). From 6 April 2027, employees will have 180 days to exercise their options and keep this relief.

The notification process that must be followed with HMRC after EMI options are granted is being combined with the existing EMI end-of-year return process to streamline scheme administration. The current notification process is somewhat convoluted, and the deadlines for the two filings are already the same. Combining them is therefore a sensible change as many companies already deal with both filings at the same time.

What tax changes have been made in the Autumn Budget that may affect business owners thinking of selling their company?

Business asset disposal relief (BADR)

The government announced that the lifetime limit on gains eligible for BADR has been halved from £1 million to £500,000, subject to the qualifying requirements. No changes to the qualifying criteria for BADR were announced.

Founders’ Relief

The government announced its intention to introduce a new CGT relief for business founders, to be known as Founders’ Relief.  Founders’ Relief offers a reduced CGT rate of 10% on lifetime gains of up to £10million.

The details of eligibility for Founders’ Relief are still to be confirmed, but the government has published a detailed consultation paper setting out its proposal. The proposed relief is aimed at founders of high-growth, innovative companies, so includes strict qualifying criteria which at first sight may be complex to show are satisfied. Access to the relief is therefore likely to be restricted to a relatively small subset of business founders.

The government are seeking views on the implementation of this new relief. The consultation closes on 30 November 2026.

Given the potential complexity of satisfying the requirements, it is to be hoped that HMRC will provide an advance assurance facility under which they are asked to confirm eligibility in advance of founders completing a sale in reliance on this relief.

The Budget provides an opportunity to review employee share incentives and consider how the changes may affect plans for employee ownership or a business sale. If you are looking to introduce or review a share scheme, explore an employee ownership trust or plan your exit, contact the Postlethwaite team to discuss what the changes could mean for your business and your next steps.