So it is possible to make a gain on a disposal of an asset used in trade A and buy an asset used in trade B. For rollover relief purposes, both trades are regarded as one single trade. Rollover relief can also be claimed by a company that sells an asset and reinvests the proceeds in a replacement asset. The companies in a gains group are treated as a single entity for the purposes of rollover relief.
This means that the gain on a qualifying business asset sold by a company in a gains group can be rolled over when a qualifying business asset is purchased by any company within the gains group within the qualifying period. The new asset must be acquired within 36 months after the disposal of the old asset, or up to 12 months before the sale. These time limits can be extended at the discretion of HMRC. The rollover relief is not automatic and a claim should be made within four years of the end of the tax year in which the gain arises or the new asset is acquired whichever is the later.
If Patricia has not bought the replacement asset by 31 January but is intending to do so before the three year anniversary period has expired, HMRC will allow her to defer the gain. To qualify for rollover relief, both the old asset and the new asset must be qualifying assets.
The list of qualifying assets can be found in s. Replacement of business assets. When certain business assets are sold and the consideration is used to acquire a new business asset, roll-over relief may, at the election of the taxpayer, be available on any gain made on the disposal.
The gain on the disposal is deemed to reduce the consideration for the acquisition of the new asset. When the new asset is sold, tax will be payable on the increased gain subject to any available reliefs. The relief is only normally available if the replacement asset is purchased in the month period preceding the disposal of the old asset or three years after, although HMRC has discretion to extend the period sections , Taxation of Chargeable Gains Act TCGA CGT reliefs: disposal of a business or its assets This guide provides an outline of the main Capital Gains Tax CGT reliefs which may apply when an individual or company replaces or disposes of a business asset, or a business, or shares in a company.
When a capital gain is made on the disposal of a business asset, it is possible to defer the gain by rolling it over against the cost of acquiring a replacement business asset. What are the conditions for the relief? What is a business asset? What is the rate of Entrepreneurs' Relief? How to claim Entrepreneurs' Relief.
Case law on Entrepreneurs' Relief. Are you enjoying our content? Thousands of accountants and advisers and their clients use www. Last Updated: 14 September
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