Does rollover relief apply to shares?

Standard rollover relief under s.152 does not apply to shares — they are not qualifying assets for this relief. However, shares in trading companies can qualify for BADR. If selling shares in a personal company, BADR at 10% may be available rather than rollover.

What NPV discount rate is used in rollover comparisons?

A 5% discount rate is commonly used for NPV analysis of deferred tax comparisons. It represents a conservative estimate of the cost of capital or return available by investing the deferred tax savings. Higher discount rates favour rollover relief more strongly; lower rates reduce rollover's advantage.

Does BADR apply to sole traders and partnerships?

Yes. BADR can apply to sole traders and partners disposing of the whole or part of their business, as well as to shareholders in a personal company. For sole traders, the business must have been owned for at least 2 years and the disposal must be of the whole business or a distinct part of it.

Is there a CGT annual exempt amount in 2025/26?

The CGT annual exempt amount for 2025/26 is £3,000. The first £3,000 of net capital gains in the tax year is exempt from CGT. This applies before BADR or other reliefs. For large business asset disposals, the £3,000 annual exemption is relatively minor but should still be considered.

What records are needed for rollover relief?

Records required for rollover relief include: sale contract and completion statement for the old asset; purchase contract for the new asset (with date to confirm it is within the 1-year before / 3-year after window); evidence both assets were used in the trade; and details of the deferred gain on the Self Assessment return.

Is rollover relief automatic or does it need to be claimed?

Rollover relief must be claimed on the Self Assessment tax return. It is not automatic. The claim must be made within 4 years of the end of the tax year in which the sale of the old asset occurred (or the acquisition of the new asset if later). A provisional claim can be made if the replacement asset has not yet been purchased.

Can rollover relief be claimed on goodwill?

Goodwill is a qualifying asset for rollover relief. If a sole trader sells their business (including goodwill) and reinvests in new business goodwill or another qualifying asset within the 4-year window, the gain on goodwill can be deferred. This is distinct from BADR on the same disposal.

What is the interaction between rollover relief and capital allowances?

Capital allowances and CGT are separate systems. If you sell a business asset that had capital allowances claimed (plant and machinery), there may be a balancing charge for income/CT purposes in addition to any CGT on the proceeds. Rollover relief only defers the CGT element — it does not affect capital allowances balancing charges.

Can companies claim rollover relief?

Yes. Rollover relief is available to companies as well as individuals and partnerships. For companies, the gain is rolled over against the CT base cost of the replacement asset, deferring the CT charge. BADR is only available to individuals — companies cannot claim BADR, but may benefit from the Substantial Shareholding Exemption (SSE) on share disposals.

What is the difference between rollover relief and holdover relief?

Rollover relief (s.152) applies when selling a qualifying business asset and reinvesting in another qualifying business asset. Holdover relief (s.165) applies when gifting a qualifying business asset — the gain is held over to the recipient, reducing their base cost. Rollover requires full market value transactions; holdover applies to gifts.

Can I claim BADR if I have previously used rollover relief?

Yes. If you claimed rollover relief on a previous disposal and the gain was rolled into the current asset, when you eventually sell the current asset and crystallise the combined gain (current gain + rolled-over gain), BADR could apply to the entire gain if the disposal qualifies. BADR at 10% on a larger crystallised gain may still be better than repeated rollover.

Is rollover relief available for assets used partly in a trade?

Where an asset is only partly used in a trade (e.g., a property only partly occupied as business premises), only a proportion of the gain qualifies for rollover relief — proportional to the business use. The non-business-use portion remains immediately chargeable. This commonly arises with farmhouses and mixed-use properties.

How does the NPV calculation work for this comparison?

NPV (Net Present Value) discounts future tax payments back to today's value using a discount rate (typically 5%). Under rollover, you pay no tax now but pay (deferred gain + future gain) × future rate in N years. NPV of this = future CGT / (1.05)^N. Under BADR, you pay gain × 10% now. If NPV(rollover) < NPV(BADR), rollover has a lower present cost of tax.

Can the BADR rate change in future years?

Yes. The BADR rate was 10% for 2025/26, but it has changed in the past (it was called Entrepreneurs' Relief at 10% until 2020, then there was a proposal to increase it). Future Budgets could change the rate upward or downward. If you anticipate a rate rise, claiming BADR now at 10% may be preferable to rolling over and paying a higher rate later.

How do I report rollover relief on my tax return?

Report the disposal in the CGT section of your Self Assessment return, including the proceeds and base cost. Claim rollover relief in the 'reliefs' section, entering the amount of gain rolled over and the date the new asset was acquired. Keep all supporting documentation in case of an enquiry.

Can rollover relief be claimed if the new asset is only a partial trade use?

If the replacement asset is not used exclusively in the trade, rollover relief is restricted to the business-use proportion. For example, if a new property is 70% business use and 30% private, only 70% of the gain can be rolled over. The remaining 30% is immediately chargeable.

What happens to the rolled-over gain if I die?

On death, capital assets are treated as disposed of at market value, but the capital gain is not chargeable — there is a CGT-free uplift. A rolled-over gain embedded in a business asset would be extinguished at death. The asset passes to the estate at its date-of-death market value, with no CGT charge on the deferred gain. This makes death a particularly efficient 'exit' from a rolled-over position.

Is professional advice necessary before choosing between rollover and BADR?

Given the values involved in business asset disposals and the complexity of eligibility conditions, professional advice from a chartered tax adviser or chartered accountant is strongly recommended. The 'better' option depends on personal circumstances, reinvestment intentions, future plans, tax rate expectations, and available lifetime BADR limit.

Where can I find HMRC guidance on rollover relief and BADR?

HMRC's Capital Gains Manual (CG) covers rollover relief in sections CG60000 onwards and BADR in sections CG63000 onwards. The gov.uk guidance on Business Asset Disposal Relief and Business Asset Rollover Relief provides accessible summaries. For technical detail, the Taxation of Chargeable Gains Act 1992 (TCGA 1992) is the primary legislation.

Can I use rollover relief to avoid CGT permanently?

In theory, repeated rollover relief can defer CGT indefinitely as long as you keep reinvesting in qualifying assets. However, the gain cannot be avoided permanently unless you die while holding a qualifying asset (CGT-free uplift on death) or give the asset to charity. CGT will eventually crystallise if the asset is sold without reinvestment.

Rollover Relief vs BADR Calculator 2025/26

Q: What is business asset rollover relief?

Business asset rollover relief (s.152 TCGA 1992) allows a taxpayer who sells a qualifying business asset and reinvests the proceeds in another qualifying asset to defer the capital gain. The deferred gain reduces the base cost of the new asset. CGT is only paid when the replacement asset is eventually sold without further rollover.

Q: What is Business Asset Disposal Relief (BADR)?

BADR (formerly Entrepreneurs' Relief) taxes qualifying gains on the disposal of a business or business assets at 10% instead of the standard CGT rate of 18% or 24%. To qualify for BADR, the individual must have held a personal company (owning at least 5% of shares and voting rights) for at least 2 years. The lifetime limit is £1 million of qualifying gains.

Q: What assets qualify for rollover relief?

Qualifying assets for rollover relief include: land and buildings used for business; fixed plant and machinery; ships, aircraft, hovercraft; satellites, space stations, spacecraft; goodwill; milk and potato quotas; fish quotas; and payment entitlements under the single payment scheme. Both the sold asset and the replacement must be qualifying assets.

Q: How long do you have to reinvest for rollover relief?

For rollover relief, the replacement asset must be acquired within a window that begins 1 year before the sale of the old asset and ends 3 years after the sale. HMRC has discretion to extend this window in exceptional circumstances. Both assets must be used in the trade.

Q: What is the BADR lifetime limit for 2025/26?

The BADR lifetime limit is £1 million of qualifying gains. Gains above this limit are taxed at the standard CGT rates (18% or 24%). The lifetime limit is cumulative across all BADR claims in your lifetime — prior BADR claims reduce the remaining limit.

Q: Which is better — rollover or BADR?

It depends on timing and reinvestment plans. Rollover is better if you need to reinvest and intend to hold the new asset long-term, as deferral allows the tax money to work in the business. BADR is better if you want finality, have no intention to reinvest, or if future CGT rates might rise. The NPV comparison in this calculator helps quantify the difference.

Q: Can both rollover and BADR apply to the same disposal?

Not simultaneously on the same gain. If you claim rollover relief, the gain is deferred into the new asset. BADR requires the gain to crystallise (be charged) — it cannot apply to a deferred gain. However, BADR could apply when the replacement asset is eventually sold, if it qualifies.

Q: What happens if only part of the proceeds are reinvested?

If only part of the sale proceeds are reinvested, partial rollover relief is available. The part not reinvested is treated as immediately chargeable, and the remaining gain is rolled over. For example, if proceeds are £500,000 and you reinvest £400,000, £100,000 is immediately chargeable and £400,000 gain is rolled (assuming the total gain is at least £400,000).

Compare Rollover Relief vs BADR

Sale proceeds (£)

Original cost (£)

Reinvestment in new qualifying asset (£)

How long until you sell the new asset (years)

Expected gain on new asset at future sale (£)

CGT rate at future sale (for deferred rollover gain)

Does asset qualify for BADR? (personal company, held 2+ years)

Current gain

Rollover available? (proceeds ≥ reinvestment)

Deferred gain (rolled into new asset)

Option A — BADR: CGT payable now

Option B — Rollover: CGT payable now

Option B — Future CGT at sale of new asset

Option B — NPV of future CGT (5% discount)

Option A — NPV of BADR tax (immediate)

Break-even: rollover = BADR NPV at (approx. years)

Recommendation

NPV calculated using 5% discount rate. Future CGT assumes deferred gain + expected new gain taxed at future rate. Break-even is approximate. Seek professional advice before making CGT relief decisions.

Rollover Relief vs BADR — The Core Trade-off

BADR: Pay 10% Now

Certainty — tax is fixed at 10%
No need to reinvest
Uses the £1m lifetime limit
Best if rates might rise in future
Best if you have no reinvestment need

Rollover: Defer CGT

No CGT now — tax stays in the business
Must reinvest full proceeds
Best if holding the new asset long-term
Gain crystallises when new asset sold
BADR might apply at future sale too

The NPV Framework

To compare fairly, both options need to be expressed in today's money (Net Present Value). Under BADR, you pay 10% now — NPV equals that 10% immediately. Under rollover, you pay more tax later — but that future payment is worth less in today's money because of the time value of money (using a 5% discount rate).

If the discounted present value of the rollover's future tax exceeds the BADR tax due now, BADR is the better choice. If the discounted value is lower, rollover wins.

The Break-Even Point

The break-even is the holding period at which the NPV of deferred rollover tax exactly equals the BADR tax payable now. Hold the new asset beyond the break-even period, and rollover relief becomes less attractive. Sell before break-even, and rollover has been worth it in present-value terms.

Important: the break-even calculation also depends on the expected future CGT rate and the size of the expected future gain on the new asset. Higher future gains shift the break-even point earlier.

Frequently Asked Questions

What is business asset rollover relief? +

Business asset rollover relief (s.152 TCGA 1992) allows a taxpayer who sells a qualifying business asset and reinvests the proceeds in another qualifying asset to defer the capital gain. The deferred gain reduces the base cost of the new asset. CGT is only paid when the replacement asset is eventually sold without further rollover.

What is Business Asset Disposal Relief (BADR)? +

BADR (formerly Entrepreneurs' Relief) taxes qualifying gains on the disposal of a business or business assets at 10% instead of the standard CGT rate of 18% or 24%. To qualify for BADR, the individual must have held a personal company (owning at least 5% of shares and voting rights) for at least 2 years. The lifetime limit is £1 million of qualifying gains.

What assets qualify for rollover relief? +

Qualifying assets for rollover relief include: land and buildings used for business; fixed plant and machinery; ships, aircraft, hovercraft; satellites, space stations; goodwill; and payment entitlements under certain agricultural schemes. Both the sold asset and the replacement must be qualifying assets used in a trade.

How long do you have to reinvest for rollover relief? +

For rollover relief, the replacement asset must be acquired within a window that begins 1 year before the sale of the old asset and ends 3 years after the sale. HMRC has discretion to extend this window in exceptional circumstances. Both assets must be used in the trade.

What is the BADR lifetime limit for 2025/26? +

The BADR lifetime limit is £1 million of qualifying gains. Gains above this limit are taxed at the standard CGT rates (18% or 24%). The lifetime limit is cumulative across all BADR claims in your lifetime — prior BADR claims reduce the remaining limit.

Which is better — rollover or BADR? +

It depends on timing and reinvestment plans. Rollover is better if you need to reinvest and intend to hold the new asset long-term, as deferral allows the tax money to work in the business. BADR is better if you want finality, have no intention to reinvest, or if future CGT rates might rise.

Can both rollover and BADR apply to the same disposal? +

Not simultaneously on the same gain. If you claim rollover relief, the gain is deferred — BADR cannot apply to a deferred gain. However, BADR could apply when the replacement asset is eventually sold, if it qualifies at that point.

What happens if only part of the proceeds are reinvested? +

If only part of the sale proceeds are reinvested, partial rollover relief is available. The part not reinvested is treated as immediately chargeable. For example, if proceeds are £500,000 and you reinvest £400,000, £100,000 is immediately chargeable and up to £400,000 of gain is rolled over.

How is the new asset base cost calculated after rollover? +

New asset base cost = purchase price of new asset − deferred gain rolled over. This means the new asset is carried at a reduced base cost. When the new asset is eventually sold, the full gain (including the deferred element) is then assessed.

What are the break-even years for rollover vs BADR? +

The break-even point is the number of years of deferral at which the NPV of the rolled-over deferred tax (at future sale) equals the tax paid now under BADR. If you hold the new asset beyond the break-even, BADR becomes better in NPV terms. If you sell before break-even, rollover is better.

Can rollover relief be claimed on a buy-to-let property? +

No. Rollover relief requires the asset to be used in a trade. Investment property (including buy-to-let) is not used in a trade — it is an investment asset. Only property used as business premises (factory, shop, office) qualifies.

What CGT rates apply in 2025/26? +

For 2025/26: BADR qualifying gains: 10% (up to £1m lifetime limit); standard gains on business assets: 18% (basic rate) or 24% (higher/additional rate). The BADR rate of 10% is significantly lower than standard rates.