What is Business Asset Rollover Relief?

Business Asset Rollover Relief is a tax relief that allows you to defer the payment of Capital Gains Tax (CGT) when you sell or dispose of certain business assets and use the proceeds to purchase new qualifying assets. In other words, instead of paying CGT on the asset's sale, you can defer the tax liability by rolling over the gain into the cost of the new asset.

How does Business Asset Rollover Relief work?

Let's say you sell a business asset for £50,000 that initially cost you £20,000. Therefore, you have gained £30,000, which would be subject to CGT. However, if you use the proceeds from the sale to purchase a new qualifying asset for £50,000, you can defer the CGT liability by rolling over the £30,000 gain into the cost of the new asset, which means that you will only pay CGT when you dispose of the new asset.

Who is eligible for Business Asset Rollover Relief?

Business Asset Rollover Relief is available to individuals and companies liable for CGT and selling qualifying business assets. To be eligible, you must reinvest the sale proceeds into qualifying replacement assets within three years of the disposal.

What assets are eligible for rollover relief?

Business Asset Rollover Relief is available for a wide range of assets, including land, buildings, plant and machinery, and shares in unlisted trading companies. There are also specific rules for assets used for business and non-business purposes. It's important to note that the relief only applies to gains made on the disposal of qualifying business assets and not to any gains made on personal assets.

How can Business Asset Rollover Relief be claimed?

To claim Business Asset Rollover Relief, you need to follow these steps:

Complete the self-assessment tax return:

If you're self-employed or a sole trader, you must include the disposal and replacement asset details in your self-assessment tax return.

Declare the relief on your corporation tax return:

If you're a company, you must include the disposal and replacement asset details in your corporation tax return.

Claim the relief:

To claim Business Asset Rollover Relief, tick the relevant box on your tax return and provide the disposal and replacement asset details.

Provide evidence:

You may be required to provide evidence to support your claim, such as a copy of the contract for selling the old asset and purchasing the replacement asset.

Frequently asked questions about Business Asset Rollover Relief

Can Business Asset Rollover Relief be used for personal assets?

No, Business Asset Rollover Relief can only be used for qualifying business assets.

Can the relief be claimed if the replacement asset is purchased before the sale of the old asset?

No, the relief can only be claimed if the replacement asset is purchased within three years of the disposal of the old asset.

Is there a limit to the amount of gains that can be rolled over?

No, there is no limit to the amount of gains that can be rolled over. However, it's important to note that the relief only applies to gains made on qualifying business assets.

What is the deadline for claiming Business Asset Rollover Relief?

The deadline for claiming Business Asset Rollover Relief is up to four years after the end of the tax year in which the old asset was disposed of. This means that if the old asset were disposed of in the 2022/23 tax year, the deadline for claiming the relief would be 5 April 2027. It's important to note that the relief could be lost if the deadline is missed.

If you would like more advice and assistance with business asset rollover relief, please contact us at info@gkaccountingservices.com

or call us on 01269 518 815, where we will be more than happy to answer any of your questions.