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HMRC internal manual

Capital Gains Manual

Roll-over relief: disposal consideration: allocation between new assets

The taxpayer’s allocation of the reduction in disposal proceeds against the cost of the new assets may be accepted. It is important that specified amounts of consideration should be positively earmarked and set against the cost of acquisition of specific new assets at the time when the claim is made and that a record is kept.

Where there are numerous disposals and acquisitions of qualifying assets, the taxpayer may object to a request for a specific allocation of disposal proceeds. Sections 152 and 153 require that relief shall be given where the person carrying on the trade makes a claim `as respects the consideration which has been so applied’. The effect of a claim is to reduce the consideration for disposal of each old asset in the claim and the consideration given for acquisition of each new asset in the claim. A claim cannot be allowed and determined until each of those elements has been identified in respect of each asset. Similarly, in the case of depreciating assets, a specific amount of held-over gain must be attached to each specific depreciating new asset.

The taxpayer may choose the old and the new assets to be included in the claim. Each disposal of a qualifying asset gives rise to a separate entitlement to claim roll-over relief. The taxpayer may prefer gains on particular disposals to be covered by losses brought forward or if an individual, may prefer to have the benefit of the annual exempt amount.