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My client's trading company is about to realise a capital gain of £40,000 on the disposal of his business premises for £200,000. The company is acquiring a replacement property costing £175,000 and wishes to claim rollover relief. Since seven-eighths of the disposal proceeds are being reinvested then presumably seven-eighths of the gain (£35,000) can be rolled over? - Crowther Image

No. The amount of gain capable of being rolled over is not found by reducing the total gain (£40,000) by the amount of proceeds not reinvested (£25,000) is potentially chargeable to corporation tax depending on the company’s other circumstances.

The company does however have the opportunity to rollover the exposed gain into other qualifying assets acquired in the year before or three years after the disposal. HMRC may, in certain circumstances, agree to an extension of the time limits.

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