Roll-over relief

By Tolley
Roll-over relief

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

  • Roll-over relief
  • Conditions for the relief
  • Qualifying assets
  • Amount of relief
  • Roll-over relief and depreciating assets
  • Parking
  • Other points
  • Claims

Roll-over relief, or ‘replacement of business assets’ relief, allows a company to defer the payment of corporation tax when a business asset is sold and the proceeds are used to replace it with another in prescribed circumstances.

TCGA 1992, s 152

Roll-over relief works by deferring the amount of the gain and reducing the base cost of the new asset by an amount equal to the rolled over gain.

Conditions for the relief
Qualifying persons

Roll-over relief can only be claimed by ‘persons’ carrying on a trade. This includes sole traders, partners in a partnership, companies or trustees / personal representatives carrying on a trade. This guidance note focuses on the corporate aspects of the relief. Commentary relating to roll-over relief for individuals or trustees can be found in the Roll-over relief for traders and Other capital gains business asset reliefs guidance notes, respectively.

TCGA 1992, s 152(1)
Qualifying reinvestment

The old asset, ie the asset being sold, must be used for the purposes of a trade carried on by the company. In other words, the asset must not be acquired simply for investment purposes.

The new asset, ie the asset being acquired, must be immediately taken into use for the purposes of the trade. It is not possible for a company to buy an asset and use it for non-trading purposes if roll-over relief is to be claimed. A trade, in this context, can include furnished holiday lettings. For example, if a landlord sells a furnished holiday let and makes a capital gain, roll-over relief will be available if the landlord reinvests all or part of the proceeds in acquiring a new furnished holiday let.

TCGA 1992, s 241; ESC D24

If a company is

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