Tx notes fa22 Final

 
Example 4 
SC Ltd bought an asset for £23,000 in June 2015. It was destroyed in October 2022. Insurance 
proceeds of £34,000 were received in March 2023. SC Ltd spent £30,000 on a replacement asset in 
June 2023
Calculate the chargeable gain and the base cost of the new asset. 
Assume indexation factors are as follows:
June 2015 to December 2017
0.250
Students may now attempt Practice Questions 26 



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Chapter 21
CHARGEABLE GAINS – COMPANIES 
– RELIEFS 
1. Replacement of business assets (Rollover Relief) 
1.1.
 
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.
1.2.
 
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.
1.3.
 
The relief 
(a)
The gain is not taxed immediately but is postponed until the company 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)
A claim must be made within 4 years from the end of the accounting period in which the 
disposal occurred.