The Relief Limit Falls to £500,000: What It Means for Electrical Owners

What the Budget announced

An electrical contractor weighing up a sale has a new date to consider. It changes the tax on a larger gain, it leaves the rate alone, and for many owners it changes nothing.

The October 2026 Budget announced that the Business Asset Disposal Relief lifetime limit will fall from £1 million to £500,000 for qualifying disposals from the start of the 2027 to 2028 tax year in April 2027 (HMRC). The 18% rate does not change, and the Budget announced no change to the main Capital Gains Tax rates of 18% and 24%. Legislation is due in Finance Bill 2026-27.

It is a lifetime limit and it takes account of relief already claimed on past gains. So an owner who has already used £500,000 or more would have none left for a disposal after the change.

HMRC estimates that about 75% of roughly 51,000 claimants are unaffected and that about 13,000 individuals are affected. If your gain is likely to be under £500,000, the change may make no difference to you.

What it means in money

For a higher rate taxpayer the relief is worth six percentage points, the gap between 18% and 24%. That is at most £60,000 on a gain of £1 million and at most £30,000 on a gain of £500,000.

Three examples, for a higher rate taxpayer who has claimed no relief before. They leave out the annual exempt amount, costs and any unused basic rate band.

• A gain of £400,000: £72,000 of tax under either limit.
• A gain of £800,000: £144,000 under the £1 million limit and £162,000 under the £500,000 limit, which is £18,000 more.
• A gain of £1.5 million: £300,000 under the £1 million limit and £330,000 under the £500,000 limit, which is £30,000 more.

What the date does and does not mean

A sale takes months and may not complete by April 2027, so this is no reason to rush, and nobody can promise a date. If a sale in the next year or two was already on your mind, you now have a dated reason to find out what the business is worth and how long a sale would take.

The date that counts for tax is normally the date of an unconditional contract, not completion. Specific rules will apply to unconditional contracts signed before the change and completed after it: the £500,000 limit applies unless the parties can show the contract was not entered into for a tax advantage from the timing, and connected parties will also need to show it was entered into for wholly commercial reasons. Signing early is not a simple way to keep the old limit. Take advice from your tax adviser early.

What a buyer is paying for

The tax change does not alter what makes an electrical business worth buying. England's electrical workforce fell from 214,200 in 2018 to 158,000 in 2024 (JTL, reported by City & Guilds), which is why in our view a stable, qualified team is hard for a buyer to replace.

If the date prompts you to look at the business, look at the team first: who holds the qualifications, who holds the customer relationships, and what would carry on if you stepped back. Those answers shape the price, and the price shapes whether the limit touches you at all.

Tax treatment depends on your own circumstances, so take advice from your own accountant or tax adviser; we set out which professionals you will need, and when.