Business Asset Rollover Relief 2026/27: Complete Guide
Sell a qualifying business asset and reinvest the proceeds in a new one within the time window, and Rollover Relief lets you defer the Capital Gains Tax that would otherwise be due. This guide explains which assets qualify, the reinvestment time limit, partial reinvestment, and the special rules for depreciating assets like plant and machinery.
Updated 1 July 2026
Key Facts
Legislation:s152-158 TCGA 1992
Reinvestment window:1 year before to 3 years after disposal
Depreciating asset cap:Deferral limited to 10 years
Available to:Sole traders, partnerships, companies
What Is Rollover Relief?
When a business sells a qualifying asset for more than it paid, a chargeable gain normally arises for Capital Gains Tax (individuals and partnerships) or Corporation Tax on chargeable gains (companies). Business Asset Rollover Relief allows that gain to be deferred where the proceeds are reinvested in a new qualifying asset within a defined time window, by reducing the base cost of the replacement asset rather than taxing the gain immediately.
This supports businesses that need to keep capital working in the trade — for example, upgrading premises or replacing machinery — without an immediate tax charge eating into the funds available for reinvestment.
Qualifying Assets
Land and buildings occupied and used for the purposes of the trade
Fixed plant and machinery (not moveable items)
Ships, aircraft and hovercraft
Goodwill, for unincorporated businesses (sole traders and partnerships) only
Certain milk and other agricultural production quotas, and some fishing vessels and quotas
The old and new assets do not need to be the same type — proceeds from selling qualifying land can be rolled into new plant and machinery, for example, as long as both fall within the qualifying list and are used in a trade.
Worked Example
A manufacturing company sells its old factory for £900,000, having originally bought it for £500,000 — a gain of £400,000. Within the following 18 months, the company buys a larger factory for £1,100,000 to expand production.
Because the full £900,000 proceeds are reinvested in a qualifying asset within the time limit, the entire £400,000 gain can be rolled over. The base cost of the new factory for future CGT purposes becomes £1,100,000 minus £400,000 = £700,000, rather than the full £1,100,000 purchase price.
No Corporation Tax on chargeable gains is due now. If the company sells the new factory in future without a further rollover claim, the gain calculated at that point will include the £400,000 originally deferred, on top of any additional growth in value since the second purchase.
Partial Reinvestment
If a business reinvests less than the full sale proceeds, only a proportion of the gain can be rolled over. Broadly, the amount of gain that remains immediately chargeable equals the amount of proceeds not reinvested (capped at the total gain). This lets a business release some cash from a disposal — for example, to pay down debt or distribute to shareholders — while still deferring tax on the portion genuinely reinvested in the trade.
Depreciating Assets
Where the replacement asset is a depreciating asset — one with a predictable useful life of 60 years or less, which in practice covers most plant and machinery — the gain is not permanently rolled into the base cost. Instead, it is held over and becomes chargeable on the earliest of three trigger events: the new asset being sold, ten years passing since it was acquired, or the asset ceasing to be used in the trade. In practice this caps the deferral at a maximum of ten years, after which the held-over gain becomes chargeable even if the asset has not been sold — unless, at that point, the taxpayer rolls the gain again into a fresh non-depreciating asset.
Interaction With Business Asset Disposal Relief
Rollover Relief and Business Asset Disposal Relief (BADR, formerly Entrepreneurs' Relief) cannot both apply to the same rolled-over gain, because Rollover Relief removes the gain from charge entirely at the point of disposal. However, a business owner planning a large disposal can choose to roll over only part of the gain and leave the remainder chargeable, applying BADR (subject to its own conditions and lifetime limit) to the chargeable portion. Getting this balance right generally needs professional advice, since the two reliefs interact with the disposal timing and the availability of each relief's own qualifying conditions.
Common Pitfalls
Missing the reinvestment window. Buying the replacement asset outside the one-year-before to three-years-after window disqualifies the claim entirely.
Assuming any business purchase qualifies. Only specific categories of asset (land, buildings, fixed plant, ships, aircraft, and limited others) qualify — office equipment, vehicles and stock generally do not.
Forgetting the ten-year cap on depreciating assets. Businesses that roll gains into plant and machinery should track the ten-year clock, as the deferred gain can crystallise even without a further sale.
Frequently Asked Questions
What is Business Asset Rollover Relief?
Business Asset Rollover Relief (sometimes called Replacement of Business Assets Relief, under sections 152 to 158 of the Taxation of Chargeable Gains Act 1992) allows a business to defer the Capital Gains Tax due on the sale of a qualifying business asset, provided the proceeds are reinvested in a new qualifying asset within a set time window. The gain is not cancelled — it is rolled into the new asset by reducing its base cost, so the tax becomes payable (subject to further rollover or other relief) when the replacement asset is eventually sold.
What types of asset qualify for Rollover Relief?
The main qualifying categories are land and buildings used in the trade, fixed plant and machinery, ships, aircraft, hovercraft, goodwill (for unincorporated businesses only, subject to specific rules), and certain agricultural quotas and payment entitlements. Both the asset sold and the asset bought must fall within the qualifying categories, though they do not need to be the same type of asset — for example, proceeds from selling a factory can be rolled into a new warehouse.
What is the time limit for reinvesting to claim Rollover Relief?
You must acquire the replacement asset within a period starting one year before and ending three years after the disposal of the old asset. This gives businesses some flexibility to buy a replacement asset in advance of selling the old one, as well as time afterwards to find a suitable reinvestment. HMRC can extend this window in appropriate circumstances, but a claim should not be made assuming an extension will be granted.
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Who can claim Rollover Relief — is it only for limited companies?
Rollover Relief is available to sole traders, partnerships and limited companies that carry on a trade, as long as both the old and new assets are used in that trade. Companies get relief against Corporation Tax on chargeable gains rather than Capital Gains Tax, but the underlying mechanism is very similar. Investment businesses that do not carry on a trade generally cannot claim rollover relief on investment property, since the relief is specifically for trading assets.
Does the whole gain have to be rolled over, or can I roll over only part?
You do not have to reinvest all the proceeds. If you reinvest less than the full disposal proceeds, only a proportionate part of the gain can be rolled over, and the balance of the gain (broadly, the amount not reinvested) remains immediately chargeable to CGT or Corporation Tax in the normal way. Partial rollover is common where a business wants to release some cash from a sale while still deferring tax on the amount genuinely reinvested.
What happens with depreciating assets like plant and machinery?
Where the replacement asset is a "depreciating asset" — broadly one with a predictable life of 60 years or less, such as fixed plant and machinery — a modified form of rollover applies. Instead of reducing the base cost of the new asset permanently, the gain is held over and becomes chargeable on the earliest of: the disposal of the new asset, ten years after its acquisition, or the asset ceasing to be used in the trade. This effectively caps the deferral period at ten years for depreciating assets rather than deferring indefinitely.
Can Rollover Relief be combined with Business Asset Disposal Relief?
Generally, you claim one relief on a given gain, not both simultaneously on the same amount, since Rollover Relief defers the gain entirely (so there is no immediate gain left to apply Business Asset Disposal Relief to). However, careful planning of what to roll over and what to leave chargeable can allow a business to use its Business Asset Disposal Relief lifetime limit on any gain that is not rolled over, while deferring the rest. This interaction is complex and usually needs a tax adviser to structure correctly.
Does Rollover Relief apply to gains on the sale of shares?
No, Rollover Relief under these rules applies to specific categories of business assets such as land, buildings, and fixed plant and machinery used in a trade — it does not apply to shares. Different reliefs, such as Business Asset Disposal Relief, Investors' Relief, or the Enterprise Investment Scheme reinvestment relief, are relevant to gains on shares, and each has its own separate qualifying conditions.
What if I use the sale proceeds to buy an asset for a different trade I also run?
Rollover Relief can apply even if the new asset is used in a different trade from the one in which the old asset was used, as long as both trades are carried on by the same person or company (or, in some cases, by a group of companies). This allows a business owner running more than one trade to move capital between them without losing the relief, provided both the old and new assets meet the general qualifying asset conditions.
How do I make a claim for Rollover Relief?
The claim is normally made on your Self Assessment tax return (for individuals and partnerships) or Corporation Tax return (for companies), for the accounting period in which the gain arose, or by an amendment to a previous return. If the replacement asset has not yet been acquired at the time the return is filed, a provisional claim can be made, which must later be confirmed once the reinvestment is completed within the time limit. Keep clear records of both disposal and acquisition dates and values, since HMRC can query the timing and qualifying status of each asset.
Disclaimer: This guide is for general information only and does not constitute personal financial or tax advice. Rollover Relief involves detailed conditions on asset type, timing and reinvestment — always consult a qualified tax adviser before relying on it.
