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

What the Budget announced

Fire safety owners tend to think in inspection cycles and renewal dates. The Budget has added one more date to the diary, and it is worth knowing exactly what it does.

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.

Why preparation matters more in a quieter market

The deal market gives another reason to start early. The Office for National Statistics counted 130 acquisitions of UK companies by UK companies in April to June 2026, against 241 in the same quarter of 2025. Those are deals of £1m or more and the 2026 figures are provisional (ONS, mergers and acquisitions involving UK companies).

In our view, fewer deals means the businesses that do reach a buyer are compared more closely. For a fire safety firm that puts the weight on the things you already keep: maintenance contracts, accreditation records and service history that a buyer can read without you in the room.

Tax and legal advice on a sale comes from your own advisers, and it helps to know who you will need, and when to bring them in.