Tx notes fa22 Final

June 2023 to March 2024 exams
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4. Replacement of business assets (Rollover Relief) 
4.1.
 
Definition 
A gain may be ‘rolled over’ (deferred) where it arises on the disposal of a qualifying business asset 
whose sale proceeds are reinvested in another qualifying business asset.
4.2.
 
Qualifying assets 
Both the old and new assets must fall into one of the following categories:
(a)
Land and buildings
(b)
Fixed plant and machinery 
Both the old and new assets must be used in the business.
4.3.
 
The relief 
(a)
The gain is not taxed immediately but is postponed until the trader makes a disposal of the 
replacement asset without further replacement.
(b)
The postponement is achieved by deducting the gain made on the old asset from the cost of 
the new one.
(c)
Where the disposal proceeds of the old asset are not fully reinvested, the surplus retained 
reduces the amount of capital gain that can be rolled over.
(d)
The replacement asset must be bought in the period 12 months before to 36 months after the 
disposal of the old asset.
(e)
Rollover relief is available on the sale of an individual asset so business asset disposal relief 
would not normally be available.
However, if the whole business is sold and rollover relief is claimed on part of the gains - any 
remaining gains could be eligible for business asset disposal relief.
(f)
A claim must be made within 4 years from the end of the tax year in which the disposal 
occurred. For disposals in 2022/23 by 5 April 2027 and by 5 April 2028 for disposals in 
2023/24.
 
Example 4
 
 
Jones purchased a property for use in his business in March 2007 for £250,000. In August 2022 he 
sold the property for £300,000 and spent £320,000 in June 2022 on a new business property.