CG60280 - Reliefs: Replacement of Business Assets (Roll-over Relief): Qualifying Assets

The principal provision setting out qualifying assets for roll-over relief purposes is TCGA92/S155. Assets listed within that section are:

  • Class 1 Head A – land and buildings occupied and used for the purposes of the trade (see CG60281 for further detail)
  • Class 1 Head B – fixed plant or machinery (see CG60282 for further detail)
  • Class 2 – ships, aircraft and hovercraft
  • Class 3 – satellites, space stations and spacecraft
  • Class 4 – goodwill
  • Class 5 – milk and potato quotas
  • Class 6 – ewe and suckler cow premium quotas
  • Class 7 – fish quota
  • Class 7A Head A – payment entitlements under the single payment scheme
  • Class 7A Head B – payment entitlements under the basic payment scheme
  • Class 8 Head A – rights of a member of a Lloyd’s syndicate
  • Class 8 Head B – Lloyd’s members’ agent pooling arrangements

The list is split into classes as it used to only be possible to roll-over a gain arising from the sale of an asset against the acquisition of another asset of the same class. Now though, there is no such restriction.

TCGA92/S198 et seq provides a form of roll-over relief specifically for assets used in connection with oil fields. Further guidance on these provisions is at OT30470+.

Under TCGA92/S152(5), relief is not available where the new asset was acquired wholly or partly for the purpose of realising a gain on its onward sale. An example of this restriction being applicable is where a farmer acquires more land than is required (perhaps because the vendor will not sell less than an entire estate) and intends to quickly dispose of the surplus, often to finance the cost of the part retained.

As above, expenditure on new buildings or additions to existing buildings occupied and used for trade purposes qualifies under Section 155 Class 1A (1). By concession (ESCs D22 and D25 respectively), relief may also be given for gains on disposals of old assets against:

  • capital expenditure on improvements to qualifying assets which are either already in use (and for land and buildings, occupied) only for the purposes of the trade or which are taken into trade use (and occupation) on completion of the enhancement work, or
  • the cost of acquisition of a further interest in qualifying assets (other than the old assets) which are already in use (and occupation) only for trade purposes.

In either case, expenditure on enhancement or acquisition of the further interest is to be treated as the acquisition of new assets which are taken into trade use on the acquisition.

A further concession offered in relation to qualifying assets is ESC D16. Whilst TCGA92/S152(1) first refers to new assets as ‘other assets’, implying that it cannot be something the person already owns, no objection should be raised to a claim involving the disposal of a trade or a trade asset if the trader, within normal time limits, reacquires the same asset for purely commercial reasons, see also CG53510+ and CG13070. This concessional treatment may be applied also to partnership changes which result in reacquisition of fractional shares in partnership assets.

With each of the ESCs discussed above, the general caveat that “concession will not be given in any case where an attempt is made to use it for tax avoidance” should be borne in mind.