The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
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.
The conditions for claiming roll-over relief, the mechanics of a claim for full relief and the interaction with the non-resident capital gains tax (NRCGT) rules 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 CGT reliefs.
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
This is illustrated by the following proformas.
Gain on the sale of the old asset:
Base cost of the new asset:
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