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HMRC internal manual

Capital Gains Manual

Roll-over relief: depreciating assets: acquisition for gain

TCGA92/S152 (5)

Relief is due only where the new assets are acquired strictly for the purpose of use in the trade. Relief is not to be allowed if the assets are acquired with a view to resale at a profit. Part of the purpose of acquiring most assets will be the expectation that they will increase in value and will ultimately be sold at a profit. The provisions of TCGA92/S152 (5) are not intended to deny relief merely because it is expected the asset will one day be sold at a profit.

The point turns on the claimant’s intentions at the time of acquisition and it is therefore imperative to obtain all of the relevant facts and circumstances. If the intention is to keep the asset and to use it for trade purposes, relief may be allowed. If the intention is to dispose of the asset and its trade use is merely a temporary convenience, relief should be denied. An example is where a farmer acquires more land than is required (perhaps because the vendor will not sell less than an entire estate) and intends to dispose of the surplus, often to finance the cost of the part retained.