Roll-over relief for traders

Produced by Tolley
Roll-over relief for traders

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

  • Roll-over relief for traders
  • Qualifying persons
  • Qualifying reinvestment
  • Qualifying asset
  • Land and buildings
  • Goodwill
  • Fixed plant and machinery
  • Less common qualifying assets
  • Time limits for reinvestment
  • Amount of roll-over relief
  • More...

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 Rollover relief guidance note. For more on the rules as they apply to trustees, see the Other capital gains business asset reliefs guidance note.

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

There is no geographical restriction in the legislation for the location of the tradeor 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 capital gains tax (NRCGT) rules introduced from 6 April 2015 which impose a UK CGT charge on the disposal of UK land by non-residents.

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 personally, but the asset is used by their ‘personal company’ in its trade, however both the old and the new asset must be used by the same company. It does not matter whether or not the company pays rent to the individual for the use of the asset. A company is an individual’s ‘personal

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