Rollover relief

Produced by Tolley

The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Rollover relief
  • Conditions for the relief
  • Qualifying persons
  • Qualifying reinvestment
  • Buying multiple assets
  • Personally owned assets used in the same personal company
  • Qualifying assets
  • Time limits for reinvestment
  • Amount of relief
  • Proceeds reinvested in full
  • More...

Rollover relief

Rollover relief, or ‘replacement of business assets’ relief, allows traders to defer the payment of capital gains tax when they sell a business asset and replaces it with another in prescribed circumstances. Sometimes rollover relief is written as ‘roll-over relief’.

Rollover 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. Full rollover relief is not always available (see below).

Conditions for the relief

Qualifying persons

Rollover relief can only be claimed by ‘persons’ carrying on a trade (referred to in this note as a ‘trader’). This includes sole traders, partners in a partnership, companies or trustees / personal representatives carrying on a trade. More information on rollover relief for trustees can be found in the Other capital gains business asset reliefs guidance note.

Qualifying reinvestment

The old asset, ie the asset being sold, must be used for the purposes of a trade carried on by the trader. In other words, the asset must not be acquired simply for investment purposes. Rollover relief is also available where an individual owns an asset, but the asset is used by their personal company (see further below).

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 trader to buy an asset and use it for non-trading purposes if rollover 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, rollover relief will be available if the landlord reinvests all or part of the proceeds in acquiring a new furnished holiday let.

If a trader is carrying on two trades at the same time, these two trades are regarded as one single trade for rollover relief purposes. Therefore, if a trader makes a capital gain on an asset

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