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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Roll-over relief: land and buildings


For the purposes of roll-over relief, land and buildings are treated as separate assets. The normal rule in TCGA92/S288 that land includes any buildings is modified for roll-over relief. For example, a hotel is made up of two assets which are the land and the buildings. Separate claims can be made for each asset. In that situation it will be necessary to apportion acquisition costs and disposal consideration and to make separate computations for each asset. This additional flexibility will often result in a claim being available where it would otherwise be prevented because insufficient sale proceeds have been invested in new assets.

With certain exceptions, land and buildings are qualifying assets within Section 155 if they are both used and occupied only for trade purposes.


The exceptions are where the trade consists of:

  • dealing in or developing land (except land or buildings not held as trading stock),


  • providing services for the occupier of land in which the person carrying on the trade has an estate or interest.

Land and buildings as depreciating assets

Although land and buildings are treated as separate assets for the purposes of roll-over relief, the life expectancy of both is determined by the length of tenure of the land on which the building stands. If a building is constructed on leasehold land and the unexpired residue of the lease when the building is completed is 60 years or less, the building is a depreciating asset.

Freehold land is never a depreciating asset, but a building on it may be, if it has a life expectancy of less than 60 years. This includes buildings with planning permission or attached legal obligations that limit its expected life to under 60 years.