Roll-over relief for traders

By Tolley
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The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Roll-over relief for traders
  • Qualifying persons
  • Qualifying reinvestment
  • Qualifying asset
  • Time limits for reinvestment
  • Amount of roll-over relief
  • Claiming relief
  • When will the deferred gain come back into charge?
  • Interaction with NRCGT rules

Roll-over relief is sometimes referred to as ‘replacement of business assets’ relief, as this allows traders to defer capital gains tax (CGT) when they sell a business asset and replace it with another (ie reinvesting the proceeds).

Roll-over relief works by deferring the amount of the gain and reducing the base cost of the new asset purchased.

Full roll-over relief is not always available (see below).

Qualifying persons

Roll-over relief can only be claimed by persons carrying on a trade (eg sole traders, partners in partnership, companies or trustees / personal representatives carrying on a trade). This guidance note concentrates on claims made by individuals. For details of the rules for companies, see the Roll-over relief guidance note (subscription sensitive). For more on the rules as they apply to trustees, see the Other capital gains business asset reliefs guidance note (subscription sensitive).

TCGA 1992, ss 152(1), 158(1)

Furnished holiday letting counts as a trade for roll-over relief purposes provided the income tax conditions are met. See the Furnished holiday lets guidance note.

TGCA 1992, s 241 as read with ITTOIA 2005, s 323

There is no geographical restriction in the legislation for the location of the trade or the asset, but both the old asset and the new asset must be subject to UK CGT or UK corporation tax. See the end of this guidance note for a discussion on the interaction with the non-resident captial gains tax (NRCGT) rules introduced from 6 April 2015 which impose a UK CGT charge on the disposal of UK residential property by non-residents.

TCGA 1992, s 159; CG60270
Qualifying reinvestment

The old asset (ie the qualifying asset being sold) must be used for the purposes of a business carried on by the trader. Roll-over relief is also available where an individual owns an asset

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