Rollover relief (also called business asset rollover relief) is a powerful CGT deferral mechanism available to businesses and sole traders in the UK. When you sell a qualifying business asset and reinvest the proceeds in a qualifying replacement within the permitted window, you can defer the capital gain rather than paying tax immediately. The gain rolls forward and reduces the base cost of the new asset.
This calculator helps you model the tax position — showing the gain deferred, the gain immediately chargeable, the CGT due now, and the adjusted base cost of the replacement asset. All figures follow HMRC rules under TCGA 1992 ss.152–158.
Key Conditions for Rollover Relief
- The old asset must have been used wholly or mainly for business purposes.
- The new asset must be a qualifying asset purchased within 1 year before or 3 years after the disposal.
- Qualifying assets: land and buildings, fixed plant and machinery, goodwill (certain cases).
- The business must be a trading business (not investment).
- Both disposal and acquisition must be of qualifying asset classes.
Rollover Relief Calculator
Results are illustrative. Rates: BADR 10%, basic rate 18%, higher/additional rate 24% (2025/26). Always confirm with a tax adviser.
How Rollover Relief Works
When you sell a qualifying business asset at a gain, you normally have to pay CGT in the tax year of disposal. Rollover relief under TCGA 1992 ss.152–158 allows you to postpone that charge by investing the proceeds into another qualifying asset. The key principle is that the gain is not written off — it is preserved by reducing the base cost of the new asset, so it comes back into charge when that asset is eventually sold.
The relief is particularly valuable for businesses that are growing or restructuring their asset base. A farmer selling a parcel of land and buying new agricultural buildings, or a manufacturing business disposing of old plant and buying new machinery, can use rollover relief to keep cash flowing into productive assets rather than paying it out in tax.
The timing window is generous: you can acquire the replacement asset up to one year before and three years after the disposal. HMRC also has discretion to extend this window where there are genuine commercial reasons for delay, such as planning permission delays on new buildings.
Partial Reinvestment and Partial Relief
You do not have to reinvest the entire proceeds to claim some rollover relief. However, any proceeds not reinvested in a qualifying asset are treated as immediately chargeable to CGT. The calculation works by determining how much of the gain corresponds to the unreinvested proceeds.
For example, if you sell an asset for £500,000 with a gain of £300,000 and only reinvest £450,000, then £50,000 of proceeds are not reinvested. The gain not deferred is the lower of the total gain (£300,000) and the unreinvested proceeds (£50,000) — so £50,000 is immediately chargeable. The remaining £250,000 is rolled over and deducted from the £450,000 acquisition cost, giving an adjusted base cost of £200,000 on the new asset.
This makes partial reinvestment a practical option if you need some liquidity from the disposal while still deferring the bulk of the tax charge. The calculator above models this scenario automatically.
Qualifying Assets and Business Asset Disposal Relief
Not all asset types qualify for rollover relief, and the rules around goodwill changed significantly in 2015. Goodwill disposed of by an individual or partnership to a related close company no longer qualifies for BADR, and the interaction with rollover relief on goodwill should be reviewed carefully with a tax adviser if the transaction involves connected parties.
Business Asset Disposal Relief (BADR) gives a 10% CGT rate on the first £1 million of qualifying lifetime gains, and it can apply to the gain immediately chargeable under partial rollover if the conditions are met. However, BADR and rollover relief cannot both apply to defer and reduce the same gain simultaneously. The deferred gain will be taxed at the rate applicable at the time of the future disposal, which may be higher or lower depending on rate changes and the taxpayer's circumstances.
For 2025/26, the CGT rates are 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers on most assets (same rates now apply to residential property following the October 2024 Budget changes). BADR remains at 10% but the lifetime limit was reduced to £1 million from April 2020.
Recording and Claiming the Relief
Rollover relief is not automatic. You must claim it on your Self Assessment tax return. If the replacement asset has already been acquired before you file, you can make a definitive claim. If you have not yet acquired the replacement but intend to, you can make a provisional claim to avoid paying CGT immediately, then confirm the claim once the reinvestment is complete within the permitted three-year window.
If you make a provisional claim and then fail to reinvest within the window, HMRC will charge the deferred CGT plus interest. It is important to track the acquisition deadline carefully and notify HMRC if circumstances change. The provisional claim is made in the CGT supplementary pages of your Self Assessment return (SA108).
Companies and Rollover Relief
Companies can claim rollover relief under the same legislative provisions, but the charge falls within corporation tax rather than CGT. Companies calculate indexed gains (though indexation was frozen from January 2018) and the gain is deferred in the same manner. The mechanics are the same but the rate is the corporation tax rate applicable at the time of the future disposal, not the CGT rates that apply to individuals.
For small companies with profits under £50,000, the small profits rate of 19% currently applies. For larger companies, the main rate of 25% applies. This makes rollover relief potentially more valuable for companies with higher profits, as the deferral preserves cash flow at higher tax rates.
Frequently Asked Questions
What is rollover relief for CGT?
Rollover relief allows you to defer a capital gain made on the disposal of a qualifying business asset if you reinvest the proceeds in another qualifying asset within a set period. The gain is not permanently cancelled; it reduces the base cost of the new asset and becomes chargeable when that asset is eventually sold.
Which assets qualify for rollover relief?
Qualifying assets include land and buildings used in the business, fixed plant and machinery, goodwill (in certain circumstances), milk and potato quotas, fish quotas, and Lloyd's syndicate capacity. The asset must have been used exclusively for business purposes. HMRC guidance should be checked for the full current qualifying list.
How long do I have to reinvest for rollover relief?
You must reinvest in a qualifying replacement asset within a window that starts one year before and ends three years after the disposal of the original asset. HMRC has discretion to extend this period in certain cases, such as genuine planning delays on new construction.
What happens if I only reinvest part of the proceeds?
If you reinvest only part of the sale proceeds, you receive partial rollover relief. The portion of proceeds not reinvested becomes a chargeable gain immediately. The remainder is deferred and reduces the base cost of the new asset.
What CGT rate applies to business asset disposals?
From April 2025, the main CGT rates are 18% (basic rate taxpayers) and 24% (higher and additional rate taxpayers). Business Asset Disposal Relief may reduce the rate to 10% on the first £1 million of qualifying gains over a lifetime.
How does rollover relief affect the base cost of the new asset?
The gain deferred by rollover relief is subtracted from the acquisition cost of the new asset to give an adjusted base cost. When you eventually sell the new asset, this lower base cost means a larger gain is computed. The tax is deferred, not forgiven.
Can I claim both rollover relief and Business Asset Disposal Relief?
Not on the same gain simultaneously. Rollover relief defers the gain; if BADR conditions are met when you eventually sell the new asset, you may claim BADR at that later disposal. The two reliefs apply at different points in time.
Does rollover relief apply to shares?
Shares do not generally qualify as replacement assets for business asset rollover relief under TCGA 1992. However, EIS and SEIS reinvestment reliefs provide separate CGT deferral mechanisms for qualifying share subscriptions.
What is the difference between rollover relief and holdover relief?
Rollover relief applies when you sell a qualifying asset at arm's length and reinvest in a new qualifying business asset. Holdover relief applies when you gift qualifying assets, passing the gain to the recipient who takes a reduced base cost. Rollover involves a commercial sale; holdover involves a gift.
Can companies claim rollover relief?
Yes, companies can claim rollover relief within corporation tax. The principles are broadly the same but the tax rate is the corporation tax rate at the time of the subsequent disposal, not the CGT rates applicable to individuals.
Is rollover relief automatic?
No. You must claim rollover relief on your Self Assessment return. If the replacement asset is not yet acquired, you can make a provisional claim. If you do not subsequently reinvest, HMRC will charge the deferred CGT plus interest.
What records should I keep for a rollover relief claim?
Keep evidence of the original disposal (sale agreement, legal fees), original acquisition cost of the old asset (purchase records, improvement costs), replacement asset purchase documents (contracts, costs), and proof that both assets were used in a qualifying business. HMRC may request these during an enquiry.