Roll-over relief for traders ― restrictions

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 ― restrictions
  • Restrictions to the amount of roll-over relief
  • Restrictions to the gain qualifying for relief
  • Reinvestment in a depreciating asset
  • Two or more assets
  • Claiming roll-over relief
  • Interaction with other capital gains tax reliefs

The conditions for claiming rollover relief (also known as replacement of business assets relief) and the mechanics of a claim for full relief are detailed in the Roll-over relief for traders guidance note.

This guidance note considers occasions where either the amount of roll-over relief is restricted or where the amount of the gain qualifying for roll-over relief is restricted. In either of these cases, this will mean a proportion of the gain remains chargeable following the roll-over relief claim, therefore this guidance note also considers the interaction of roll-over relief with other capital gains tax (CGT) reliefs.

Restrictions to the amount of roll-over relief
Partial reinvestment

Where the trader reinvests only part of the proceeds of an old qualifying asset in the acquisition of a new qualifying asset the roll-over relief claim is restricted.

The gain remaining chargeable is the amount of the proceeds not reinvested:

Chargeable gain = Proceeds from sale of old asset – cost of new asset

TCGA 1992, s 153

This is illustrated by the following proformas.

Gain on the sale of the old asset:

 £  
Sales proceedsX  
Less: costs of sale(X)  
Less: cost or market value as at 31 March 1982 (MV82) if later(X) 

More on Capital gains summary: