Budget 2026: Small Business Relief for Older Persons
How the 2026 Budget changes the Paragraph 57 capital gains tax relief for small business owners aged 55 and older.
By Dirk Coetzee — Director, DCA Group · February 2026 · 3 min read
What the 2026 Budget proposes to change
The 2026 Budget announced the following amendments to Paragraph 57:
- The lifetime exclusion increases from R1.8 million to R2.7 million.
- The asset value threshold for qualifying as a “small business” increases from R10 million to R15 million.
- The age threshold of 55 years remains unchanged.
What Paragraph 57 provides
Paragraph 57 of the Eighth Schedule provides for a once-off, lifetime exclusion of capital gains of up to R1,800,000 on the disposal of qualifying small business assets by an individual who has reached the age of 55, or who has sold their business due to retirement, ill-health, or upon death.
Key requirements to qualify
To qualify as a “small business”, the market value of all the assets of the business on the date of disposal may not exceed R10,000,000. The person selling the assets must have held their interest in the business for at least five years prior to the date of disposal and must have been substantially involved in the operations of the business during that time. The business can be carried on as a sole trader, partnership or company. In the latter case, the individual must hold at least 10% of the shares and must dispose of their entire holding.
Note: the R1.8 million exclusion and R10 million asset threshold above reflect the current rules; the 2026 Budget proposes raising these to R2.7 million and R15 million respectively.
How DCA Group can help
The interaction between retirement, ill-health, business structure and capital gains tax is rarely straightforward, and the relief must be claimed correctly to apply. If you are planning to sell or wind down a business, speak to our team and we will help you structure the disposal and apply the relief you qualify for.
This article is general information based on the 2026 Budget proposals and does not constitute tax or financial advice. Proposals may change before they are enacted. Originally shared by Dirk Coetzee on LinkedIn.