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HMRC internal manual

Capital Gains Manual

Roll-over relief: application of disposal consideration

Except where extension of the time limit in Section 152 (3) is requested, it is not necessary to establish a link between the disposal proceeds and their application. To do so would deny relief in almost every case because:

  • where acquisition precedes disposal, it would never be possible to show that the consideration for disposal of the old assets was applied in acquiring the new assets;


  • in almost every other case, the consideration for disposal of the old assets will be applied, initially, to some other purpose such as the acquisition of a debt upon lodgement of the funds into a bank account.

If the investment in new assets is made within the statutory time limit, there is a presumption that the disposal consideration was wholly applied in acquiring the new assets included in the claim. This is so except to the extent that the total consideration for disposal of the old assets in the claim exceeds the total cost of acquisition of the new assets in the claim. No account need be taken of, for example, loans outstanding in respect of the old assets or raised in respect of the new assets.

A simple comparison should be made between the net consideration for disposal (after deduction of disposal expenses) and the cost of acquisition (including incidental expenses).

On 1 January 2006 a farmer sells land for £150,000. The expenses of sale are £5,000. On 1 October 2008 the farmer buys land for use in the trade at a cost of £145,000 plus expenses of £4,000. To fund the purchase, the farmer raises a mortgage of £100,000. For the purposes of a claim under Section 152, the disposal consideration is £145,000 and the amount applied in acquiring new assets is £149,000. Full relief is therefore due.

Expenditure reimbursed out of public money

The case of Wardhaugh v. Penrith Rugby Union Football Club (74TC499) establishes that the amount or value of the consideration given for acquisition of the new assets is the amount before any reduction under TCGA92/S50 (see CG15288+).