What is rollover relief on business assets?
Answered 11 March 2026
Business Asset Rollover Relief
What the law says
The core relief — TCGA 1992, s.152
Rollover relief (formally "replacement of business assets" relief) is provided by TCGA 1992, s.152. Where a person carrying on a trade disposes of assets ("the old assets") that were used, and used only, for the purposes of the trade throughout the period of ownership, and applies the consideration in acquiring new assets ("the new assets") which are also taken into use, and used only, for the purposes of the trade, the person may claim relief. On a valid claim, they are treated:
- (a) as if the consideration for the disposal of the old assets were reduced to an amount that produces neither a gain nor a loss; and
- (b) as if the acquisition cost of the new assets were reduced by the excess of the actual disposal consideration over the deemed (no gain/no loss) consideration.
The effect is that the gain is "rolled over" into the base cost of the new asset — deferring the tax until the new asset is eventually disposed of.
Time limits
The acquisition of the new assets must take place, or an unconditional contract for acquisition must be entered into, in the period beginning 12 months before and ending 3 years after the disposal of the old assets, or at such earlier or later time as HMRC may allow. Relief may be applied on a provisional basis pending completion of the acquisition.
Anti-avoidance
The relief does not apply unless the new assets were acquired for the purpose of use in the trade, and not wholly or partly for the purpose of realising a gain from their disposal.
Partial reinvestment — TCGA 1992, s.153
Where only part of the disposal proceeds are reinvested (but the uninvested part is less than the total gain), full rollover under s.152(1) is not available. Instead, the gain is reduced to the amount of the proceeds not reinvested, and the cost of the new asset is reduced accordingly.
Qualifying asset classes — TCGA 1992, s.155
Both the old and new assets must fall within the same class listed in s.155. The classes include:
| Class | Assets |
|---|---|
| 1 | Buildings/structures and land occupied and used only for trade purposes; fixed plant or machinery not forming part of a building |
| 2 | Ships, aircraft and hovercraft |
| 3 | Satellites, space stations and spacecraft |
| 4 | Goodwill |
| 5 | Milk quotas and potato quotas |
| 6 | Ewe and suckler cow premium quotas |
| 7 | Fish quota |
| 7A | Single payment scheme / basic payment scheme entitlements |
| 8 | Lloyd's syndicate rights |
Partial use of assets
Where only part of a building is used for trade purposes, that part is treated as a separate asset. Where the old asset was not used for trade purposes throughout the entire period of ownership, an apportionment is made on a just and reasonable basis.
Depreciating assets — TCGA 1992, s.154
Where the new asset is a depreciating asset (a wasting asset or one with a maximum life of 60 years), the gain is not deducted from the cost of the new asset. Instead, it is held over and crystallises on the earliest of: disposal of the new asset; cessation of use of the new asset for the trade; or 10 years from acquisition.
Groups of companies — TCGA 1992, s.175
Section 152 applies to groups of companies as if the disposing company and the acquiring company (both group members at the relevant times) were the same person, provided both companies make the claim.
HMRC guidance / practice
How the relief works in practice
HMRC's Capital Gains Manual confirms that rollover relief may be claimed where the proceeds from the disposal of qualifying assets are applied, within the specified time limits, in acquiring new qualifying assets. The relief takes the form of:
- a reduction in the consideration for disposal of the old asset (so no gain arises immediately); and
- where the new asset is non-depreciating: a corresponding reduction in the acquisition cost of the new asset; or
- where the new asset is depreciating: the chargeable gain is held over until disposal, cessation of trade use, or 10 years.
Depreciating assets — HMRC's approach
HMRC confirms that freehold land is never a depreciating asset, but a building on it may be if it has a life expectancy of less than 60 years (e.g. due to planning conditions). A building on leasehold land with an unexpired lease of 60 years or less at completion is a depreciating asset. Importantly, the death of the claimant is not treated as a cessation of trade use triggering the held-over gain.
Qualifying assets — HMRC's approach
HMRC notes that a right to unascertainable future consideration received on a disposal is not a qualifying asset for rollover relief purposes, so rollover relief cannot be claimed on a later disposal of such a right.
Extension of time limits
HMRC's discretion to extend the 3-year reinvestment window has been delegated to Grade 7 CG specialists, who may grant an extension where the new asset was acquired not more than 3 years before or 6 years after the disposal and there are acceptable reasons for the delay (e.g. compulsory purchase threats, difficulty disposing of the old asset, or circumstances beyond the claimant's control). Importantly, an extension cannot be granted in advance of all conditions being satisfied.
Partial use of buildings
HMRC confirms that where part of a new building is used exclusively for trade and part is not, the cost is apportioned on a just and reasonable basis and rollover relief is available only on the qualifying portion. No equivalent apportionment is available for other asset classes in s.155 — those assets must be used exclusively for trade.
Furnished Holiday Lettings (FHLs)
CGT rules (including rollover relief) are applied to FHLs as if they were a trade, meaning FHL owners can potentially access Business Asset Rollover Relief (HMRC Helpsheet 290).
Citation sources
Guidance on the normal rules for roll-over relief is at CG60250C onwards. Broadly speaking, the relief may be claimed where the proceeds from the disposal of qualifying assets are applied, within specified time limits, in acquiring new qualifying assets. The relief takes the form of reduction in consideration for disposal of the old asset and, where the new asset is non-depreciating: reduction in the cost of acquisition of the new asset, or where the ‘new asset’ is depreciating: holding over the
Part III Income Tax, Corporation Tax and Capital Gains Tax Chargeable gains Roll-over relief and groups of companies. 48 1 In section 175 of the Taxation of Chargeable Gains Act 1992 (replacement of business assets by members of a group), after subsection (2) there shall be inserted the following subsections— 2A Section 152 shall apply where— a the disposal is by a company which, at the time of the disposal, is a member of a group of companies, b the acquisition is by another company which, at t
Partial Use in Terms of Space Partial Use in Terms of Time Meaning of ‘Period of Ownership’ Partial Use in Terms of Space The list of assets in TCGA92/S155 that may qualify for roll-over relief includes in Class 1, Head A, `any building or part of a building'. This implies that a part of a building may be a separate asset for the purpose of the relief. This implication is reinforced by TCGA92/S152(6), which applies where a part of a building or structure is used for the purpose of a trade to tre
ed by the trader for his trade. Note though that an assessment should be made on the gain on disposal on the earliest of the following occasions: as soon as the condition of intention to reinvest in qualifying assets ceases to be satisfied when the land ceases to be used for the trade of the claimant, including on death of the trader or complete cessation of the trade in good time before the expiry of the relevant assessing time limit Board’s Discretion It is important to note that an extension
Part V Transfer of business assets , business asset disposal relief and investors' relief Chapter I Transfer of business assets: General provisions Replacement of business assets Roll-over relief. 152 1 If the consideration which a person carrying on a trade obtains for the disposal of, or of his interest in, assets (“ the old assets ”) used, and used only, for the purposes of the trade throughout the period of ownership is applied by him in acquiring other assets, or an interest in other assets
interest in, the building or structure and other land. 7 If the old assets were not used for the purposes of the trade throughout the period of ownership this section shall apply as if a part of the asset representing its use for the purposes of the trade having regard to the time and extent to which it was, and was not, used for those purposes, were a separate asset which had been wholly used for the purposes of the trade, and this subsection shall apply in relation to that part subject to any
Part V Transfer of business assets , business asset disposal relief and investors' relief Chapter I Transfer of business assets: General provisions Replacement of business assets Relevant classes of assets. 155 The classes of assets for the purposes of section 152(1) are as follows. CLASS 1 Assets within heads A and B below. Head A Any building or part of a building and any permanent or semi-permanent structure in the nature of a building, occupied (as well as used) only for the purposes of the
the amount of the reduction to be made under subsection (1)(b) above shall be the amount of the chargeable gain, and not the whole amount of the gain. 3 Subject to subsection (4) below, this section shall only apply if the acquisition of, or of the interest in, the new assets takes place, or an unconditional contract for the acquisition is entered into, in the period beginning 12 months before and ending 3 years after the disposal of, or of the interest in, the old assets, or at such earlier or
CGT rules are applied to FHLs as if they were a trade. You can get more information on how CGT rules apply to FHLs in the following helpsheets: Helpsheet 275 Business Asset Disposal Relief. Helpsheet 290 Business Asset Rollover Relief. Helpsheet 295 Relief for gifts and similar transactions. Helpsheet 296 Debts and Capital Gains Tax (This helpsheet includes information on relief for loans to traders, here the relief is for the person who makes the loan).
Definition Further Acquisition of Qualifying Assets Example: Further Acquisitions Example: Partial Reinvestment Definition Specific rules apply for roll-over relief where the newly acquired assets are depreciating assets. A depreciating asset is defined as a wasting asset under TCGA92/S44, see CG76700, or an asset with a maximum life of 60 years. That is, an asset which will become a wasting asset within 10 years of the relevant time. Although land and buildings are treated as separate assets fo
A company sells business premises for consideration consisting of cash plus a right to unascertainable future consideration. It acquires replacement premises and claims roll-over relief under TCGA92/S152, see CG60250+. Roll-over relief will not be available to the company on the later disposal of the right. The right is not a qualifying asset for rollover relief purposes, see CG60280P. Top of page
Part V Transfer of business assets , business asset disposal relief and investors' relief Chapter I Transfer of business assets: General provisions Replacement of business assets Assets only partly replaced. 153 1 Section 152(1) shall not apply if part only of the amount or value of the consideration for the disposal of, or of the interest in, the old assets is applied as described in that subsection, but if all of the amount or value of the consideration except for a part which is less than the