UK CGT 24% vs Bulgaria 10%: founder exit playbook for 2026

The UK has spent the last 18 months making founder exits more expensive in every single direction. Main-rate CGT went from 20% to 24% in October 2024. Business Asset Disposal Relief (BADR), the founder's headline relief, went from 10% to 14% in April 2025 and now 18% from 6 April 2026. Investors' Relief moved in parallel. Carried interest is no longer CGT at all — it became income-tax-plus-NIC from 6 April 2026, effective top rate ~34.1%. Anti-forestalling provisions in Finance Act 2024 closed the “sign now, complete later” loophole. For a founder selling a UK company in the current tax year, the all-in tax bill on a £10M exit can comfortably exceed £2.3M. Bulgaria taxes the same disposal at 10% if held personally, with structuring options that bring the effective rate lower still — and 0% on disposals of shares traded on EU/EEA-regulated markets under Personal Income Tax Act (PITA) Article 13(1)(8). This guide walks through the 2026/27 UK numbers, the Section 10A TCGA 5-year clawback, the anti-forestalling traps, the UK-Bulgaria DTT mechanics, and the Bulgarian holding-company structures most commonly used by relocating founders.

UK CGT in 2026/27 — What Founders Actually Pay

The current rates are the cumulative result of three tax-policy changes in 18 months. Founders planning a 2026 or 2027 exit need to model against the current state, not the rates that applied a year ago.

BADR's headline benefit has been substantially eroded. At 10%, the relief saved a founder £140,000 on a £1M qualifying gain (vs 24% main rate). At 18%, the same gain saves only £60,000. For exits above £1M, the marginal saving from BADR has shrunk to a rounding error against the overall transaction value.

Anti-forestalling rules: why a 2024 contract date doesn't help

Finance Act 2024 introduced anti-forestalling provisions in Schedule 3, paragraphs 13–16. The intent was to stop founders from signing an unconditional sale contract before each rate increase to lock in the lower rate. Three conditions now apply for a pre-rate-change contract date to be respected:

• The contract must have been unconditional at the date of execution;
• The transaction must not have been entered into for "obtaining a tax advantage" (HMRC may probe heavily);
• Parties must have been at arm's length, with no connected-party exceptions.

Connected-party transactions are explicitly excluded. So is a contract that was "conditional" on (e.g.) a regulatory clearance or warranty negotiations. In practice, the only contracts that benefit are genuine third-party deals signed before 30 October 2024 and completed during the rate-change window — a very narrow set.

The £3,000 annual exempt amount — a token

The annual exempt amount was £12,300 in 2023/24, £6,000 in 2024/25, and is £3,000 in 2026/27. For a founder exit it is a rounding error and not worth planning around. We mention it only because some founders still expect the £12k.

Bulgarian Taxation of Share Disposals — the Other Side

Bulgaria's PITA, applied to a Bulgarian-resident individual, distinguishes between three categories of share disposal.

The 0% rate on EU/EEA-regulated-market disposals is one of Bulgaria's structurally most generous provisions. A Bulgarian-resident founder who restructures pre-exit so that their holding becomes a position in an EU/EEA-listed vehicle (e.g. via a Frankfurt or Amsterdam-listed entity) can crystallise a major exit at 0% personal tax. Few founders use this route directly because most exits are private trade sales rather than IPO routes — but it matters for PE-backed disposals to listed acquirers paid in stock.

For most founders the practical path is the 10% personal rate or the EOOD-holding 14.5% combined rate. The choice depends on the founder's wider plans — reinvestment of proceeds, family-office structuring, and onwards estate planning. For a deep dive on the holding company, see our Bulgarian EOOD holding company guide.

UK-Bulgaria DTT Article 13 — the Treaty Allocation

The UK-Bulgaria Double Tax Treaty (signed 26 September 1987, in force from 1988) allocates taxing rights on capital gains in Article 13. The relevant subsections for founder exits:

• Article 13(1): Gains on immovable property (UK real estate) are taxable in the country of the property's situs — UK. Disposals of UK property by Bulgarian residents remain in the UK Non-Resident CGT regime regardless of treaty.
• Article 13(2): Gains on movable property forming part of a permanent establishment are taxable where the PE is. Generally not relevant for a founder share sale.
• Article 13(3): Gains from the alienation of ships/aircraft are taxable in the country of effective management.
• Article 13(4): Gains on shares deriving more than 50% of value from UK immovable property (UK property-rich companies) are taxable in the UK regardless of seller residence.
• Article 13(5) — the founder-exit clause: Gains from the alienation of any property not falling within paragraphs (1) to (4) are taxable only in the country of residence of the alienator.

For a standard UK trading company sale by a Bulgarian-resident founder (where the company does not hold significant UK real estate), Article 13(5) applies — the gain is taxable only in Bulgaria. The UK has no taxing right.

Breaking UK Residence: SRT Mechanics for Founders

Pre-disposal, the founder must already be non-UK tax resident under the Statutory Residence Test. Two common paths:

Case 1 split-year (full-time work overseas)

The founder becomes director of a Bulgarian EOOD on (say) 1 May 2026, works 35+ hours per week from Sofia, and meets the overseas work criteria from that date through 5 April 2027. The year splits on 1 May 2026. Any disposal after 1 May falls in the overseas part — outside the UK tax net under Article 13(5).

Case 3 split-year (ceasing UK home)

The founder sells or genuinely lets the UK home and ceases to have any UK accommodation available. The year splits on the date the UK home goes. The 15-day cap on UK days in the overseas part is stricter than Case 1's pro-rated 90-day allowance.

Either case requires that the founder is non-UK resident for the entire following tax year (an automatic overseas test or the sufficient-ties test). For the full mechanics, see our UK Statutory Residence Test → Bulgaria guide and the month-by-month split-year timeline.

The Section 10A TCGA 5-Year Clawback

The single most-overlooked rule for relocating founders is Section 10A of the Taxation of Chargeable Gains Act 1992. It treats gains realised during a period of temporary non-residence (less than 5 complete UK tax years out of the UK) as taxable in the UK in the year of return.

Practical implication: if a founder leaves the UK on 1 May 2026, sells the UK company on 1 October 2026, and returns to the UK on (say) 1 May 2030 — the gain crystallised in October 2026 comes back into UK CGT in tax year 2030/31. The Bulgarian 10% paid in 2026 may be creditable, but the difference (24% UK minus 10% BG = 14% × £10M = £1.4M) becomes payable.

The rule applies to gains on assets owned at the date of departure and to certain gains on assets acquired during non-residence (specifically interests in close companies). To be safe, plan for at least 5 complete UK tax years of non-residence. For most founder relocations this is easily achieved — the value of Bulgarian 10% is greatest as a multi-year structure, not a one-year arbitrage.

Worked Examples — £5M, £15M and £50M Exits

All worked examples assume a higher / additional-rate founder, BADR applied to the first £1M, no Investors' Relief overlay, no UK property in the target company (so Article 13(5) DTT applies), and a clean split-year departure to Bulgaria before signing.

Exit value: £5M

Headline saving on a £5M exit: ~£640,000 over a UK-resident sale. The EOOD-holding route is sub-optimal at this exit value if proceeds are needed in cash; the personal hold wins.

Exit value: £15M

Saving: ~£2,040,000. At this exit size the EOOD-holding route starts to make sense for founders who want to reinvest proceeds via the holding company without immediate dividend distribution (deferring the 5% dividend layer indefinitely).

Exit value: £50M

Saving: ~£6,940,000. At this scale, the structuring choice between personal hold and EOOD holding is driven by family-office strategy, succession planning and IHT exposure (the new UK residence-based IHT applies a 10-year tail to long-term UK residents — see our UK IHT planning guide).

Personal Holding vs Bulgarian Holding Company — Decision Matrix

The default for an exit under £10M with proceeds needed in cash is personal holding. The default for an exit above £15M with reinvestment intent is the EOOD or AD holding. Hybrid structures (personal hold of vesting tranche + holding-company hold of liquidity event) are increasingly common.

Dual-Residence Risk in the Year of Sale

In the year of move, both the UK and Bulgaria may claim residence. UK split-year handles the UK side; Bulgaria does not split. The DTT tie-breaker in Article 4(2) resolves dual residence in this order:

1. Permanent home in one country only;
2. Centre of vital interests in one country only;
3. Habitual abode in one country only;
4. Nationality.

For a clean exit, build the Bulgarian permanent home and centre of vital interests before the SPA signature: 12-month lease or property purchase, Bulgarian bank, family relocation, Bulgarian EOOD operations, school registrations. HMRC compliance enquiries on large founder exits routinely probe these.

Paperwork Sequence for the Exit

Why Founders Are Picking Bulgaria, Not Dubai

Dubai's 0% personal tax is structurally lower than Bulgaria's 10%. But Dubai is not in the EU, not in the eurozone, has no EU-level passporting for funds and operating businesses, and presents practical issues for founders running pan-European businesses. Bulgaria is:

• EU Member State — freedom of capital, services, establishment;
• Eurozone since 1 January 2026 — no FX friction with EUR-denominated portfolios;
• Schengen since 1 January 2025 — passport-free travel across 29 countries;
• EU regulatory passport for financial services, fund management, payment institutions;
• Time zone compatible with London (UK + 2 hours);
• Direct flights: Sofia — London 4–5 daily (under 3.5 hours); Plovdiv and Varna seasonal.

For founders with European operations, European fund relationships and European family commitments, the EU residency dimension is often more valuable than a marginal tax saving over Dubai. See our Bulgaria vs Dubai comparison.

Frequently Asked Questions