Other capital gains business asset reliefs

By Tolley in association with Paul Davies at DWF

The following Trusts and Inheritance Tax guidance note by Tolley in association with Paul Davies at DWF provides comprehensive and up to date tax information covering:

Other capital gains business asset reliefs
Roll-over relief on replacement of business assets
Incorporation relief
Deferral relief under the enterprise investment scheme
Company reconstructions
Losses on loans to traders

This note deals with the following types of business asset reliefs:

•roll-over relief on replacement of business assets
•incorporation relief
•capital gains tax (CGT) deferral relief under the enterprise investment scheme (EIS)
•CGT reliefs on company reconstructions
•losses on loans to traders

So-called ‘business’ hold-over and entrepreneurs' relief, are dealt with in the Hold-over relief and Entrepreneurs' relief – trusts guidance notes.

Except where noted otherwise, these reliefs are available both to personal representatives and to trustees. For brevity this note omits any further reference to personal representatives except where such reliefs specifically do not apply or are not available to them.

Roll-over relief on replacement of business assets

Roll-over relief enables the gain arising on the disposal of certain types of business assets to be deferred if other qualifying assets are acquired within the period commencing one year before and ending three years after the date of the disposal. HMRC may extend these time limits in certain cases. Relief will be restricted if the asset disposed of has not been used for business purposes throughout the period of ownership.

The relief must be claimed within four years of the end of the tax year in which the disposal of the assets, or acquisition of the new assets (whichever occurs later) takes place. A provisional claim can be made if there is a clear intention to obtain the relief, however if the tax deferred ultimately falls due because the conditions for relief are never met, interest will be charged on the late payment of the tax.

TMA 1970, s 43; TCGA 1992, s 153A

For an in depth analysis of the types of assets that qualify, and the