Chancellor John Healey is facing accusations of "robbing Peter to pay Paul" following the revelation that a new 300 million pound tax break for company founders will be funded by increased taxes on other entrepreneurs selling their businesses. The move has drawn criticism from small business leaders who argue the changes send mixed signals about the government's commitment to supporting businesses.

In his recent Budget, Healey announced a preferential 10 percent capital gains tax (CGT) rate on lifetime gains for founders of "high growth" and "innovative" companies under a new perk dubbed ‘Founders’ Relief’. The aim, according to Healey, is to encourage these entrepreneurs to remain in the UK when they sell their companies.

However, this initiative is being implemented concurrently with a reduction in Business Asset Disposal Relief (BADR). This existing relief previously allowed owners to pay a lower CGT rate of 18 percent instead of the standard 24 percent on up to £1 million in gains. The new policy halves this limit to £500,000, meaning owners of established businesses who cash out will now face a higher tax burden.

The Office for Budget Responsibility, an independent fiscal watchdog, estimates that the approximately £300 million cost to the taxpayer by 2030 for Founders’ Relief will be entirely offset by the additional tax revenue generated from the reduction in BADR.

"There is a risk (this) looks like robbing Peter to pay Paul," said Joshua Raymond, UK managing director at investing app XTB. "The Chancellor takes relief away from the business owners who build steady, profitable firms to fund a headline relief for the founders of the most successful companies."

Healey defended the changes, stating, "I know that starting a company means taking risk. Leaving a secure job to build something with no guarantee that it will work. And I believe that when business founders take that risk, build an exceptional company and create wealth for Britain, we should recognise that success and keep those people here to invest again."

Despite the Chancellor's intentions, tax experts have pointed to "incredibly restrictive" qualifying criteria for Founders’ Relief. To be eligible, founders must own at least 25 percent of the company, have held shares for a minimum of five years before selling, and the company must have a turnover of at least £10 million and employ at least 15 people.

Malli Kini, a partner at advisory firm Blick Rothenberg, commented, "A new founders’ relief on the first £10 million of gains is a bold and welcome move that could make the UK a far more attractive place to start and grow a business. It will go some way to softening the blow of halving the Business Asset Disposal Relief limit. However, the devil will be in the detail. If the qualifying conditions are too narrow, many long-standing family businesses and smaller owner-managers will find themselves worse off overall, while the benefit goes mainly to venture-backed start-ups."

The government has announced that a consultation will be launched to determine the specific eligibility criteria for Founders' Relief.