Home 5 Capital Gains Tax 5 CGT Rollover Relief

CGT Rollover Relief

30 May 2024

Business Asset Rollover Relief also known as CGT Rollover Relief allows for deferral of Capital Gains Tax (CGT) on gains made when taxpayers sell or dispose of certain assets and use all or part of the proceeds to buy new business assets. The relief

Capital Gains Tax (CGT) Rollover Relief helps businesses defer tax on profits from selling certain assets. If you reinvest the sale proceeds into new business assets, you won’t pay CGT immediately. Instead, you’ll pay it when you sell the new asset. This relief encourages businesses to reinvest and grow.

Active Business Investment

When you sell a business asset and buy a new one, CGT Rollover Relief lets you postpone the tax. You roll the gain from the old asset into the new one’s cost. This move delays the CGT until you sell the new asset. It’s a smart way to keep investing in your business.


Partial Claims and Planning Ahead

You can claim partial relief if you reinvest only some of the proceeds. Haven’t bought new assets yet? You can still claim provisional relief. This means you plan to reinvest and can defer the tax when you file with HMRC. You can also claim relief for using proceeds to improve existing assets. The relief amount ties to your reinvestment.


Meeting the Relief Criteria

To get relief, you must meet certain conditions. Buy new assets within three years of selling the old ones, or one year before. HMRC may extend these limits in special cases. Both old and new assets must be for your business. Your business should be trading when both transactions happen. Claim relief within four years after the tax year end when you bought the new asset or sold the old one, whichever is later.


Strategic Tax Planning

Consider the long-term effects of deferring tax liabilities. While CGT Rollover Relief offers immediate benefits, think about the future tax when you sell the new asset. Work with tax professionals for strategic planning that fits your business goals.

In short, CGT Rollover Relief is a strategic tool for managing tax on capital gains. It supports business investment and economic growth. Understanding and using this relief effectively can benefit your business’s financial planning. It shows the government’s support for business investment and economic progress.

Source: HM Revenue & Customs Tue, 28 May 2024 00:00:00 +0100

You may also like these

Here are some more articles that might interest you

Expert Advice

If you’d like more information on anything you’ve read, we’re here and happy to help