Rollover relief

Replacement of business asset relief

Rollover relief (ROR) allows the gain arising on the disposal of a qualifying business asset to be rolled over (i.e deferred) when the sale proceeds are reinvested in a qualifying replacement asset within a qualifying time period.

This relief is both available to individuals and companies.

For individuals  

The relief:

  • The gain arising on the disposal of the qualifying business asset is deducted from (rolled over against) the purchase cost of the replacement asset.
  • Provided the net sale proceeds are fully re-invested, no tax is payable at the time of the disposal.
  • ROR effectively increases the gain arising on the disposal of the replacement asset, as its base cost is reduced by the amount of gain rolled over.
  • Gains may be ‘rolled over’ a number of times such that tax liability will only arise when there is disposal without replacement.
  • When the deferred gain crystallises, it’s taxed at that time (not the rate applicable at the time of the deferral).
  • The relief is not automatic, it must be claimed.
  • An individual must claim the relief within 4 years of the later of the end of the tax year in which the:
  • Disposal is made, and
  • Replacement asset is bought.
  • Disposal in the tax year 2020/21, which is reinvested in a new asset in the tax year 2021/22, requires a claim by 5th April 2026.


Qualifying business assets:

  • Goodwill
  • Land and buildings
  • Fixed plant and machinery (immovable)

Both the old and the replacement assets must be qualifying business assets.

Qualifying time-period:

The replacement assets must be purchased within a period:

  • Beginning one year before, and
  • Ending three years after the date of the sale of the old asset


Joe Bloggs purchased an asset qualifying for ROR in Jan 2002 for £160,000. In August 2020, he sold the asset for £180,000 and spent £200,000 in November 2020 on a new qualifying asset.

Gain on disposal of the asset:

Sales proceeds180,000
Less: Cost(160,000)
Less: ROR (deferred gain)(20,000)
Chargeable gain0

Base cost of new asset:

Acquisition cost200,000
Less: ROR (deferred gain)(20,000)
Revised base cost180,000

For companies:

Rollover relief (ROR) for companies operates, in general, in the same way as for individuals, as summarised below:

  • ROR allows a company to replace assets used in its trade, without incurring a corporation tax liability on the related chargeable gains.
  • The gain arising on the disposal of the business asset is deducted from (rolled over against), the acquisition cost of the new asset.
  • Provided the proceeds are fully re-invested, no tax is payable at the time of the disposal.
  • Purchase of the replacement asset must occur during a period that begins one year before the sale of the old asset and ends three years after the sale.
  • If re-invested in a depreciating asset (<60 years useful life), the chargeable gain is deferred until the earliest of:
  • Disposal of the depreciating asset
  • Depreciating the asset ceases to be used for trading purposes.
  • 10 years after the depreciating asset was acquired.

Key differences:

  • Goodwill is not a qualifying asset for companies
  • The gain deferred is the ‘indexed gain’ (i.e the gain after IA).
  • The claim must be made within four years of the later of the end of the accounting period in which the asset is
  • Sold, and
  • Replaced.

Please note there are different rules where the sales proceeds are not fully reinvested.

If you would like some more information on rollover relief, please give us a ring on 01273 441 187 or email

George Laingchild PJCO Peter Jarman
George Laingchild

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