Rollover relief is a valuable tax planning tool for businesses that need to dispose of old assets and acquire new ones. It can help to preserve cash flow and enable businesses to reinvest in new assets without being unduly burdened by tax liabilities. It’s important to note that rollover relief does not eliminate the CGT liability, it only defers it until the replacement asset is sold. At that point, the CGT liability will be calculated based on the difference between the disposal proceeds of the old asset and the acquisition cost of the new asset.
Rollover relief is a tax relief that allows a taxpayer to defer the payment of capital gains tax (CGT) that would otherwise arise on the disposal of an asset. The relief applies when the proceeds from the disposal of an asset are used to acquire another asset. The defered tax will e paid when you pay the newly aquared asset. You must claim relief within 4 years of the end of the tax year when you bought the new asset (or sold the old one, if that happened after).
You can also claim,provisional relief if you’re planning to buy new assets with your proceeds but have not done yet or relief if you use the proceeds to improve assets you already own.
To qualify for Business Asset Rollover Relief:
· you must buy the new assets within 3 years of selling or disposing of the old ones (or up to one year before)
· your business must be trading when you sell the old assets and buy the new ones.
· you must use the old and new assets in your business.
· You can claim relief on assets including:
– land and buildings
– fixed plant or machinery, for example a printing press
Partial reliefThe rules are diferent if:
· you only reinvest part of the proceeds from selling the old assets.
· the old assets were only partly used in your business.
· you use the proceeds to buy ‘depreciating assets’ (fixed plant or machinery, or assets expected to last for less than 60 years)
Please contact us for more information on 0117 2565052 or email us on info@taks.org.uk
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