CG60284 - Reliefs: Replacement of Business Assets (Roll-over Relief): Qualifying Assets: Intangibles

TCGA92/S156ZA and S156ZB

Section 84 and Schedules 29 and 30 FA 2002 introduced the Intangible Property reform (IP reform) which has amended the roll-over provisions in respect of companies only by generally removing the availability of relief for intangible fixed assets acquired on or after 1 April 2002. From that date, assets within the Intangibles Regime, for example goodwill and quotas acquired from an unrelated party, are dealt with under the new regime. This provides for companies to obtain tax relief for the cost of these assets based on the amortisation reflected in their accounts.

Detailed guidance on the reinvestment relief available for companies disposing of intangible assets is at CIRD20000+.

There are transitional arrangements for disposals and acquisitions in the period around 1 April 2002. Note that the availability of roll-over relief on gains arising from the disposal of qualifying assets other than assets within the FA 2002 Intangibles Regime into the acquisition of similar assets is unaffected by the new legislation and continues to be subject to the normal capital gains rules.

If a company disposes of land or buildings, or one of the other assets not within Classes 4 - 7 in TCGA92/S155 (see CG60280), roll-over relief is not available against any capital gain from that disposal where the new asset is within the Intangibles Regime for companies, for example goodwill or quota acquired from an unrelated party on or after 1 April 2002. This does not apply to individuals or trustees.

The difference in treatment for individuals and companies on this point is illustrated in the example below.

Smudge Ltd and Christie carry on a farming trade in partnership equally. On 1 May 2014, the partnership disposed of milk quota (acquired in 2006) for a net consideration of £100,000, making a chargeable gain of £30,000.

On 31 March 2019, the partnership acquired new trading premises for £120,000.

Christie is able to roll-over her £15,000 gain into the acquisition of the new premises. However for Smudge Ltd, as the old asset is within the Intangibles Regime but the new asset is not, roll-over relief is unavailable and so the company is liable on the gain arising from the disposal of the quota.