Roll Over Relief

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Roll Over Relief

• Roll over relief is a deferral of CGT in order
  tocounter the anti-enterprise penalty of CGT
• The capital gain is calculated in the ordinary
  way and is deducted from both
• the capital gain accruing on the disposal of
  asset no. 1, and
• the acquisition cost of asset no. 2
• If the cost of an asset is reduced the potential
  gain which might accrue on a future disposal will
  be correspondingly greater

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Business Assets for R/O Relief

• Both old and new assets must belong to one of the
  following classes
• Land and buildings
• Fixed plant or machinery
• Ships, aircraft or hovercraft
• Satellites, space stations or spacecraft
• Goodwill (not in the case of companies)
• Milk, potato, fish and certain agricultural
  quotas (not in the case of companies)

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Roll Over Relief - Conditions

• Asset no. 2 must be acquired between
• 12 months before, and
• 3 years after
• the disposal of asset no. 1
• Both old and new assets must only be used for
  trade purposes

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Time Limited Roll Over(DEFERRAL of C/gain)

• If asset no. 2 is a depreciating asset (60 year
  life expectancy at time a acquisition), the gain
  is not rolled over but accrues on the earliest
  of
• disposal of the new asset
• new asset ceasing to be used in the trade
• 10th anniversary of acquisition of the new asset
• But if asset no. 3 (non-depreciating) is acquired
  before the gain has crystallised, the deferred
  gain may be rolled over against the cost of asset
  no. 3

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Roll Over Relief on Transfer of a Business to a
Company (1)

• Conditions-
• Transferor must not be a company
• Business must be transferred as a going concern
  with all of its assets except cash
• Business must be transferred wholly or partly in
  consideration for shares issued to the transferor

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Roll Over Relief on Transfer of a Business to a
Company (2)

• Capital gains are calculated as though the
  business assets were sold piecemeal to the
  company, but typically they will relate to
• land, buildings and goodwill

• Where consideration is partly in the form of
  assets other than shares, then proportion of net
  gains attributable to
• other assets is a chargeable gain (after taper
  relief), and
• shares is rolled over

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