Business Asset Rollover Relief

Introduction

If you sell a business asset and make a capital gain, you may be able to defer paying Capital Gains Tax by claiming Business Asset Rollover Relief. This relief allows you to "roll over" the gain into the cost of a new business asset, meaning you won't pay tax until you eventually sell the replacement asset.

What is Business Asset Rollover Relief?

Business Asset Rollover Relief lets you delay paying Capital Gains Tax when you sell business assets and reinvest the proceeds into new business assets. Instead of paying tax immediately on your gain, the tax liability is postponed until you sell the new asset. At that point, you may need to pay tax on the gain from both the original asset and any additional gain on the new one.

This relief is particularly useful if you're replacing essential business assets and don't want a large tax bill to reduce the funds available for reinvestment.

Qualifying for the relief

To claim Business Asset Rollover Relief, you must meet several conditions:

Timing requirements

You must buy the new assets within a specific timeframe. The replacement asset must be purchased within 3 years after selling the old asset, or up to one year before selling it. This gives you a four-year window overall.

Trading requirement

Your business must be trading both when you sell the old assets and when you buy the new ones. The relief is not available if your business has ceased trading.

Use of assets

Both the old and new assets must be used only for trading purposes in your business. If an asset is partly used for non-business purposes, you may only qualify for partial relief.

What assets qualify?

You can claim rollover relief on specific types of business assets, including:

• Land and buildings
• Fixed plant or machinery (such as a printing press)

These are the main categories of qualifying assets for this relief.

Depreciating assets

Special rules apply to "depreciating assets" – these are fixed plant or machinery, or assets expected to last for less than 60 years.

For depreciating assets, you can get relief for up to 10 years. This means the gain is held over for a maximum of 10 years rather than being rolled into the cost of the new asset indefinitely.

Partial relief

You don't always need to reinvest the entire proceeds to get some relief. You might be able to claim relief on part of the gain if:

• You only reinvest part of the proceeds from selling the old assets (not the full amount)
• The old assets were only partly used for trading purposes

In these situations, the relief will be proportionate to the amount reinvested or the extent of business use.

Provisional relief

If you're planning to buy new assets but haven't purchased them yet, you can claim provisional relief. This prevents you from having to pay Capital Gains Tax while you're searching for suitable replacement assets.

Provisional relief gives you breathing space to find and acquire the right assets without an immediate tax charge. You can get provisional relief for up to 3 years from 31 January after the tax year when you disposed of the old asset.

For example, if you sell the old asset in May 2026 (which falls in the 2026/27 tax year), you can get provisional relief until 31 January 2031.

Once you've bought the new asset, you'll need to complete the claim process again to convert the provisional relief into full rollover relief.

How to claim

You claim Business Asset Rollover Relief using HMRC's HS290 form. You should complete this form and attach it to your Self Assessment tax return.

If you cannot attach the form to your tax return electronically, you can send it by post to:

Capital Gains Tax Queries

HM Revenue and Customs

BX9 1AS

United Kingdom

Time limits for claiming

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 later.

For example, if you sell the old asset in May 2026 and buy the new asset in August 2028, you need to claim relief by 5 April 2033.

Claiming provisional relief

To claim provisional relief, fill in the first part of the HS290 form giving details of the disposal and how much you plan to reinvest. Attach this to your Self Assessment tax return. When you subsequently buy the new asset, you'll need to complete the form again to finalise your claim.

Key points to remember

• You have a four-year window to reinvest: one year before to three years after selling the old asset
• Both old and new assets must be used entirely for trading
• The relief defers tax rather than eliminating it – you'll pay when you eventually sell the replacement asset
• You can claim provisional relief if you haven't yet found replacement assets
• You have up to 4 years after the relevant tax year end to make your claim

Sources

• Business Asset Rollover Relief

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.