Rollover Relief: Can I Put Off Capital Gains Tax by Buying More Land?

The proper name is Business Asset Roll-over Relief, and most farmers and agents call it rollover, or talk about rollover money. It is set out in sections 152 to 159 of the Taxation of Chargeable Gains Act 1992. HMRC's helpsheet HS290 describes it as a relief that lets you defer any Capital Gains Tax when you sell business assets and use the money to buy new ones for the business.

When you claim, the land you sold is treated as sold for whatever figure gives neither a gain nor a loss, so no gain arises on it. The gain does not vanish. The same figure is taken off the cost of the land, buildings or fixed plant you buy with the money, and that lower figure is used as your cost when you eventually sell them. A bigger gain then arises on that later sale, and that is when the tax put off today becomes payable, at the rates in force at the time.

Two consequences follow. First, the relief only helps someone who will keep farming, because the money has to go back into the business. Second, the postponed gain stays inside the reduced cost of the new land for as long as you own it. Section 62 of the 1992 Act says that on a death the person who died is not treated as disposing of their assets, and whoever inherits them is treated as acquiring them at their market value at the date of death. The reduced cost is replaced by that value, so a gain rolled into land still owned at death is never charged to Capital Gains Tax. Inheritance tax is a separate question with its own rules. This is why rollover often sits inside a long-term family plan.

The rates, the annual exempt amount and how the gain itself is worked out are in our guide to tax when selling land for development.

The relief belongs to traders. HMRC's manual says it is available to people who carry on a trade and use the assets for that trade, and then adds a line that decides most farming cases: roll-over relief is not available for let property or other investments. Farming is a trade, so a farmer who works the land in hand is in the right position.

The trading test applies at both ends of the deal.

• The land you sell. Section 152 asks that it was used only for the trade throughout your period of ownership. Where it was not, only the trading share qualifies, as explained further down. Any time before 31 March 1982 is ignored.
• The land you buy. It must be taken into use, and used only, for the trade when you acquire it. Section 152(5) also says there is no relief where the new asset was bought wholly or partly to make a gain on selling it again.
• The same trade, or one that follows. Your two trades are treated as one for this purpose, whether you run them side by side or one after the other. HMRC treats trades as following on where the gap between them is no more than three years, so a farmer who stops and later starts a new trade may still qualify.
• The same person. The relief is personal to whoever made the disposal, and the money has to be applied by that person in buying the new asset.

Partnerships, Family Companies and Land You Own Yourself

Many farms are run as a family partnership while the land itself is owned by one partner. HMRC's manual on partnerships says that roll-over relief is available for assets used in the partnership trade that are owned by an individual partner, even where the partnership pays that partner rent. A partnership cannot claim as a body: each partner claims on their own share of the old and new assets.

The same idea applies to a family company. If you own land personally and your own company farms it, you can claim when you sell that land, provided the company is your personal company, meaning you can exercise at least 5% of its voting rights, at the time of the sale and of the purchase, and the new asset is also provided for the company's trade.

The test in section 155 of the 1992 Act is land occupied, as well as used, only for the purposes of the trade. HMRC's guidance on land and buildings explains that a letting which gives the tenant exclusive occupation is not normally a relevant asset of the owner's trade. Occupation means physical possession or control for the trade; simply owning the land is not enough.

Grazing Licences

Grazing licences, common on paddocks and small parcels, sit on the line. HMRC's farming guidance describes grass keep let for less than a year, often 364 days, with no right of renewal. Where the owner still occupies the land wholly or mainly for husbandry, HMRC treats the owner as farming, and the grazing licence as part of the same farming trade. An owner who fertilises, fences and manages the grass is in a very different position from one who takes a fixed fee and leaves everything to the grazier. That guidance is about income tax, and rollover asks the separate question of occupation, so the facts need looking at before anyone counts on the relief.

Holiday Lets and Planning Hopes

Furnished holiday lettings used to be treated as a trade for rollover. HMRC's manual records that they are no longer treated as a trade from 6 April 2025 (1 April 2025 for companies), so a holiday let sold or bought on or after that date gives no rollover. The same manual deals with land that has been bought and planned for but not yet put to use. Following the case of Temperley v Visibell, buying land intending to build on it, visiting it and obtaining planning permission are not enough to show it was occupied and used for a trade.

Land That Was Partly Let and Partly Farmed

Where land was farmed for only part of the time you owned it, the relief is apportioned. Section 152(7) treats the trading part as a separate asset, having regard to how long, and how much, it was used for the trade.

Where land is let, our guide to tenancies and vacant possession explains how tenancies end.

Section 155 lists the classes of asset that count, and the old and new assets do not need to be the same kind. For a farm, the relevant classes are land, buildings and permanent or semi-permanent structures, all occupied and used only for the trade, and fixed plant or machinery that does not form part of a building. HMRC's helpsheet gives an everyday test for plant: a printing press fixed in place qualifies, a lorry does not.

• More farmland. The most common choice. It must be farmed in the business from the day you acquire it, so land bought with a sitting tenant does not normally qualify, because it is not taken into use in your trade when you buy it.
• A farm with a house. A farmhouse lived in as a private home is not occupied only for the trade, so the cost has to be apportioned, and only the farming part takes rolled-over gain. Any part of the house used only for the business can be treated as a separate asset.
• New buildings on land you already farm. Improvements to assets you already own count as acquisitions, provided the asset is used in the trade or brought into use when the work is finished. A new general-purpose shed can take rolled-over gain without any new land being bought.
• Fixed plant. Plant fixed in place, such as a built-in grain dryer or slurry system, can count, but it is a depreciating asset, so the gain is only held for up to ten years, as the next sections explain.
• Not machinery that moves, not livestock, not loans. Tractors and vehicles are not fixed plant. Stock is not in the list. Paying off a mortgage or an overdraft is not buying a new asset, so money used that way is treated as money not reinvested.
• Not something bought to sell on. Land bought with the aim of selling it at a profit fails section 152(5), however it is farmed in the meantime.

There is no requirement that the new land is near the old, or even in England. HMRC's manual says there is no geographical restriction on the location of the trade for a UK resident. A family is free to buy wherever suitable land comes up. A non-resident selling UK land is limited to replacement UK land.

Section 152(3) sets the window, and HMRC's manual on time limits confirms that it runs from 12 months before to 36 months after the disposal of the old asset. The helpsheet's own illustration is a shop sold in August 2025, which allows qualifying purchases from August 2024 to August 2028.

When HMRC Will Extend the Three Years

The 1992 Act lets HMRC allow a later date, and its manual sets out how that discretion is used. The claimant must show three things: a firm intention to buy replacement assets within the time limit, that a fact or circumstance beyond their control prevented it, and that they acted as soon as they reasonably could once that obstacle had gone. HMRC calls it a question of fact and degree.

• The kinds of reason HMRC recognises include the death or serious illness of a vital party at a key moment, a dispute or litigation that has not been settled, difficulty proving title, difficulty finding a suitable replacement, and delay in receiving the money from the sale.
• The kinds it does not include a late change of mind, and a shortage of money caused by spending the proceeds on something that does not qualify.
• How it is decided. HMRC only looks at an extension once both the sale and the purchase have happened, and only senior specialists can approve or refuse it. A tribunal cannot overturn a refusal.
• Provisional relief is not extended. A declaration of intention to reinvest, covered below, ends on its own date whatever HMRC later decides about the window.

HMRC asks for all the relevant facts about the delay, and evidence that the sale money was applied in buying the new assets. Records made at the time, such as particulars of farms viewed, bids made and lost, and letters with agents, are the natural evidence.

The rollover window runs from the disposal, and the date of a disposal under contract is fixed by section 28 of the 1992 Act. The general rule is that the disposal is made when the contract is made, not when the land is transferred. A conditional contract is the exception, and the Act names options in particular: if a contract is conditional, and in particular if it is conditional on the exercise of an option, the time of disposal is when the condition is satisfied.

For land sold to us under an option agreement, the disposal happens when we exercise the option, once planning permission has been secured. Signing the option is not the sale of the land. Our guide to conditional contracts explains the same timing rule for that kind of agreement, and the tax guide linked above covers how any option fee is taxed.

Three practical points follow for a farmer who wants to roll the gain over.

• Keep farming the land until completion. Under our agreements you keep using the land until completion, and that use is what the trading test looks at. A field left idle, or let out, in the years before the sale weakens the claim.
• Start looking before exercise. Because the window opens a year before the disposal, land found and bought while the planning application is being decided can still take the gain, provided the option is then exercised within twelve months. If permission is not achieved there is no sale and no gain to roll over, so buying ahead is a judgement for you and your adviser as a decision approaches. We keep you informed at every consultation, committee meeting and decision, so you will see the likely date coming.
• A fixed figure helps the planning. Our price is agreed at the start and written into the agreement as a figure, so your accountant knows from the beginning roughly how much needs to be reinvested to roll over the whole gain.

Section 153 deals with partial reinvestment, and HMRC's helpsheet puts it in one line: the taxable amount is the lower of the full gain and the proceeds not reinvested. If the amount kept back is larger than the gain, the whole gain is taxed and no relief is left.

This is where the arithmetic catches people out. A family that reinvests a sum equal to the gain, and keeps the rest, has not rolled the gain over, because every pound kept back is taxed until the gain is used up. Keeping some back is often still the right choice, to clear borrowing or help the next generation, and the tax on that part is then simply the cost of the freedom.

Section 154 treats some replacement assets as depreciating assets, meaning assets with a life of 60 years or less. HMRC's manual on depreciating assets says plant and machinery is always in that group, freehold land never is, and a building on leasehold land is a depreciating asset if there are 60 years or less left on the lease when it is completed. A building on freehold land can also be one if its expected life, or a planning condition on it, is under 60 years.

When the new asset is a depreciating one, the gain is not taken off its cost. It is held over, and comes back into charge on the earliest of three dates:

• the day the depreciating asset is sold;
• the day it stops being used in the trade;
• ten years after it was acquired.

Before any of those dates arrives, the held-over gain can be moved into a lasting asset, such as more farmland. Section 154(4) lets you claim against the new, lasting asset instead, and the earlier claim is treated as withdrawn. Section 154(5) treats the new land as bought within the usual time limit, even when it comes years after the original sale, although the claim itself must still be made within the normal four-year limit. HMRC's manual adds that the gain moved cannot be more than the gain held over, that it can be spread across more than one lasting asset in turn, and that death is not an occasion on which a held-over gain is charged.

1. Report the sale in the tax return for the year of disposal. On the Capital Gains pages, HMRC uses the code ROR for a rollover claim and PRO for provisional relief.
2. If you have not bought yet, declare provisional relief. In that return, state that you intend to reinvest all or part of the proceeds within the time limit, giving the land sold, the amount received and the amount you expect to reinvest. Tax on that part of the gain is not then payable on the usual date.
3. Buy within the window. Land, buildings or fixed plant, taken into use in the trade from the start.
4. Make the claim. Once you have bought, you make a full claim, which replaces the provisional declaration. HMRC's helpsheet HS290 includes a claim form, or the details can go on the Capital Gains pages of the return.
5. If plans change, say so. If you decide not to reinvest, tell HMRC as soon as you can. The tax becomes payable with interest from the date it would originally have been due, so delay costs money.

The Two Deadlines

• The claim. A rollover claim must be made within four years after the end of the tax year in which the later of the sale and the purchase took place. In HMRC's helpsheet example, a shop sold in May 2023 and replaced in August 2025 has a claim deadline of 5 April 2030.
• The provisional declaration. It ends on the third anniversary of the 31 January after the tax year of the sale, which is three years after the normal payment date for that year's tax. It ends sooner if a claim replaces it or you withdraw it.

Provisional relief suits a farmer selling under an option, because the right land may not be for sale in the year of exercise. If the purchase never happens, though, the tax comes back with interest. Take HMRC's own illustration of a £20,000 gain on a sale in June 2025. That sale falls in the 2025/26 tax year, so the tax would normally have been paid on 31 January 2027. Under the declaration it is not paid then, and if no purchase follows, it is paid with interest from 31 January 2027. The declaration lasts three years beyond that payment date.

HMRC's manual sets out how the two interact. If the whole of the gain is rolled over, no chargeable gain arises on the sale, so there is nothing for Business Asset Disposal Relief to work on, and the manual says a claim to it would not be appropriate. Where only part of the gain is rolled over, the part that stays chargeable may still qualify for Business Asset Disposal Relief if its own conditions are met.

When the replacement land is later sold, its gain, including the gain rolled into it, is worked out in the normal way, and may itself qualify for Business Asset Disposal Relief if the conditions are met at that time. Which route is better for a particular family is a question for their accountant, with the whole picture in front of them.

These points show quickly whether rollover is likely to come up with your accountant.

• Is the land farmed in hand by you, your farming partnership or your personal company, rather than let to someone else?
• Has it been used that way for the whole time you have owned it, or only part of it?
• Do you, or will you, carry on a farming or other trade after the sale?
• Is there land, a building or fixed plant you would want to buy for the business, and is any of it for sale where you would farm it?
• Will the new land be farmed by you from the start, with no tenant in place?
• Who owns the land being sold, and will the same person, or people in the same shares, own what is bought?
• Do you expect to keep any of the money back, for borrowing, family or other plans?
• Is there a farmhouse, a let cottage or a holiday let in either the land sold or the land bought?

None of these needs an answer before land is looked at. A free desktop review of your land deals with the land itself: where it sits, its constraints and whether it has a case for planning. The tax questions sit alongside that, with your own adviser.