Commentary

C3.304 Rollover relief—expenditure on replacement assets qualifying for relief

Capital gains tax
Capital gains tax | Commentary

C3.304 Rollover relief—expenditure on replacement assets qualifying for relief

Capital gains tax | Commentary

Rollover relief—acquisition of replacement assets

C3.304 Rollover relief—expenditure on replacement assets qualifying for relief

Whether expenditure is on other assets

As outlined in C3.301 rollover relief is available where the whole or part of the proceeds of the disposal of an asset used for the purposes of a trade is reinvested in the acquisition of other replacement assets (new assets) to be used for the same trade. It is generally accepted that it is the disposal consideration net of incidental costs of disposal that is to be compared with the total costs of acquisition including incidental costs of acquisition1. It is not necessary to establish a link between the actual disposal proceeds and their application on the acquisition of other assets. It is sufficient that the appropriate amounts are matched.

Although the legislation refers to new assets, expenditure on second-hand replacement assets also qualifies.

In general, a gain on the disposal of an asset cannot be rolled over into the reacquisition of the same asset2. TCGA 1992, s 152(1) refers to the acquisition of 'other assets or an interest in other assets'. However, by concession, relief is given where a business or business asset is sold and subsequently repurchased for purely commercial reasons. This concessional treatment may apply to partnership changes resulting in the reacquisition of fractional shares in partnership assets3. For commentary on provisions intended to counter abuse of this concession, see C3.1910.

HMRC takes the view that relief is not available where there is a deemed disposal and reacquisition of

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