05/07/2024
Rollover Relief (ROR)
What is ROR
This is a very useful Capital Gains Tax (CGT)/Corporation Tax (CT) relief, that allows a taxpayer (individual or company) that sells a qualifying business asset used in their trade, to defer any chargeable gain made against the acquisition of a newly acquired business asset. The entire proceeds must be re-invested in the newly acquired business asset. If only part of the proceeds are reinvested in a qualifying asset, the remaining part of the gain is taxable immediately.
For this relief to be available, the newly acquired business asset must be bought within one year before or three years after the disposal of the business asset which has attracted a chargeable gain.
What Assets Qualify for ROR
The main qualifying assets are:
- Land and buildings, this applies even if the asset is held personally but used in a qualifying trade.
- Fixed Plant & Machinery
- Good will (unincorporated businesses only)
If any of the assets were not used for business purposes during the ownership period, the available ROR will be restricted based on the period of non-business use.
How to Claim & When to Claim By
A claim is usually made on the Tax Return for the individual. For a company it is advised that as well as including the gain on the CT Return, HMRC are advised of separately in writing.
Any claim must be made within four years after the end of the tax year/accounting period of which the later of the following events take place:
- The tax year of disposal
- The tax year in which the new assets are purchased.
Provisional claims can be made if no new asset has been purchased but the taxpayer aims to acquire a replacement asset within the above timeframes.
HMRC Campaign
Taxpayers who made provisional claims for ROR back in 2020/21 and who have not updated the status of a ROR claim (to reflect the replacement asset actually purchased) are being contacted by HMRC. If the claim is not updated before 31 January 2025 HMRC will withdraw the provisional claim and the CGT/CT due becomes chargeable.
In either case HMRC are urging taxpayers to get in contact pre 31 January 2025, to update them if a replacement asset was bought or not bought.
The above is just a snapshot of ROR and if you wish to know more about this relief and how it may apply to you, then please feel free to get in touch and ask for one of the tax team.
Please contact 023 8046 1237 or email Joe Wilson if you would like more information on the above.
Visit our personal tax services page for more information.
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