Key takeaways

  • Rollover relief lets a trading business defer the gain on selling a business asset by reinvesting the proceeds in new qualifying assets.
  • The new asset must be bought between one year before and three years after the sale.
  • Reinvest all the proceeds for full relief; if you keep some, that amount of the gain is taxable now.
  • If the new asset is a depreciating asset, such as a lease of 60 years or less or fixed plant, the gain is held over for up to 10 years instead.
  • You can make a provisional claim on your tax return if you intend to reinvest.

Selling business premises to move to bigger ones should not create a tax bill that stops the move. Rollover relief (formally business asset rollover relief) solves this by deferring the gain on the old asset until the replacement is eventually sold without being replaced.

Who can claim

Rollover relief is available to:

  • sole traders and partnerships
  • companies (for Corporation Tax on chargeable gains, although goodwill and intellectual property held by companies follow the intangible assets rules)
  • individuals who own assets used in their personal company’s trade
  • certain other activities treated as trades, such as some professions and vocations

Both the old and new assets must be used in the trade. Assets let to third parties as an investment do not qualify, and since the furnished holiday lettings regime ended in April 2025, holiday lets no longer qualify either.

Qualifying assets

The old and new assets must each fall within the qualifying classes, but they do not need to be the same type. The main classes are:

  • land and buildings occupied and used only for the trade
  • fixed plant and machinery that does not form part of a building
  • goodwill (for individuals and partnerships)
  • ships, aircraft and hovercraft
  • satellites and space stations
  • milk, potato and fishing quotas and some agricultural payment entitlements

You could, for example, sell a warehouse and reinvest in a new office for the same trade.

The time window

The new asset must be acquired, or an unconditional contract entered into, within:

  • one year before the disposal of the old asset, or
  • three years after it

HMRC can extend the window in exceptional circumstances. The new asset must be brought into use in the trade straight away on acquisition.

How the relief works

The gain on the old asset is deducted from the cost of the new one. No tax is paid now, but the new asset’s lower base cost means a bigger gain when it is eventually sold.

Example: full reinvestment

A sole trader sells a workshop for £300,000, which cost £180,000, giving a gain of £120,000. Eighteen months later he buys new premises for £350,000.

Amount
Gain on old workshop£120,000
Gain rolled over£120,000
Gain taxable now£0
Base cost of new premises (£350,000 − £120,000)£230,000

Partial reinvestment

If only part of the proceeds is reinvested, the amount not reinvested is taxed immediately (up to the gain), and the rest is rolled over. In the example above, if the new premises cost £260,000, then £40,000 of the £300,000 proceeds was kept back. £40,000 of the gain is taxable now and £80,000 is rolled over.

Partial business use

If an asset was only partly used for the trade, or used for only part of the time, relief is restricted proportionately.

Depreciating assets

If the new asset is a depreciating asset, meaning it has a predictable life of 60 years or less (for example fixed plant, or a lease with 60 years or less to run), the gain is not deducted from its cost. Instead it is held over and becomes taxable on the earliest of:

  • the date you sell the depreciating asset
  • the date you stop using it in the trade
  • 10 years after you acquired it

If, before the held-over gain crystallises, you buy a non-depreciating qualifying asset, you can switch the held-over gain into rollover relief on that asset.

Making a claim

  • Claim on your tax return, or by letter to HMRC, within four years of the end of the tax year in which the later of the disposal or acquisition took place (for companies, four years from the end of the later accounting period).
  • If you have sold the old asset and intend to reinvest but have not yet done so, you can make a provisional claim on the return for the year of sale. If you do not reinvest within the three years, the provisional claim is withdrawn and the tax becomes due with interest.

Rollover relief and other reliefs

  • If you rolled over a gain, Business Asset Disposal Relief is not available on that gain now, but may apply when the replacement business is eventually sold.
  • Rollover relief can be combined with incorporation relief and holdover relief in some situations; take advice before restructuring.

Frequently asked questions

How long do I have to reinvest for rollover relief?

Between one year before and three years after the sale of the old asset.

Does the new asset have to be the same type as the old one?

No. Both must fall within the qualifying classes and be used in the trade, but you could replace a building with plant, or goodwill with land.

What happens if I only reinvest part of the proceeds?

The proceeds you keep are taxed now, up to the amount of the gain, and the rest of the gain is rolled over.

Can a company claim rollover relief?

Yes, for land, buildings, fixed plant and other qualifying assets. Company goodwill and intellectual property have their own reinvestment relief under the intangible assets rules.

Sources

Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance in October 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.