Roll Over Relief Flashcards
What is the proforma for ROR
Proceeds
Cost
Gain
Cash retained
ROR
Proceeds
Cost
Cash retained
Cost
ROR
Base cost
Inlcude business and non business column.
How does ROR work
ROR deferrs the gain by reducing the base cost of the new asset therefore uplift the gain when it is sold
What are the conditions who can claim/ old asset
Persons carrying on a trade (individual or partner)
A company carrying on a trade
An individual who owns an asset that is used in their persnal trading company
What are the conditions for the old asset
Used for the purpose of the bsuiness, can be an asset owned by an indivdual who owns an asset used in a personal trading company.
Qualifying asset
What are the conditions for the new asset
Qualifying asset
Used immediately in the business
Other querks
ROR allowed for furnished holidays lets
Has two business disposes of an asset in business A can purchase an asset in business B ROR can apply
What are qualifying assets
Land and building
Fixed Plant and machinery
Goodwill
Lease on property
Ships/ hovercraft / satelites/ space ship
What are not qualifying assets
Moverable plant and machinery (tractor)
Combine harvestor
Vehicles
Shares - CANNOT BE USED IN THE TRADE
What is the investment window
The new qualifying asset must be purchased within 12 months prior to the disposal or 36 months after the disposal.
Admin
The claim must be made not later than 4 years following the tax year in which the gain was realised or the new asset purchase (which ever is the later)
Provisions can be made if new qualifying asset is intended to be pruchased within the investment window
Report and pay all CGT by the 31st Janaury following the end of the tax year in which the gain was realised.
Relationship between BADR and ROR
Example - selling business and purchasing new assets for a new business.
What is a depreciating asset
Wasting asset an asset with a useful economic life of less than 60 years
How does ROR work for depreciating asset
The gain is not rolled over instead the gain is frozen. The gain crystalises at the earliest of the three events:
The depreciating asset is sold
The depraciating asset is no longer used in the trade
10 years frollowing aquisition
What is parking
If a gain is frozen and prior to this gain crystalising the trader purchases a non deprciating asset (with a life of more than 60 years) the frozen gain can be rolled over and set against the base cost of the new non depreciating asset.
Sell depreciating asset buy non depreciating asset/ lift escalator that has formed part of the building
Normal rules apply/ will treat as a non depreciating asset
