CG17912 - Taper relief: qualifying holding period: roll-over reliefs: Taper relief does not apply to disposals before 6 April 1998 or after 6 April 2008

Where a gain is relieved under a provision which reduces the cost of a replacement asset (for example, roll-over relief for business assets), the amount of the rolled-over gain is the gain before any taper relief is given. On any subsequent disposal of the new asset, no account is taken of the period during which the old asset was held. For the purposes of taper relief, the qualifying holding period on the subsequent disposal begins on the date that the replacement asset is acquired, or 6 April 1998 if later.

There is an exception to this in the case where there is a transfer of a business to a company (see CG65700+) and an election is made to disapply the mandatory roll-over of net chargeable gains of the unincorporated business where the transfer takes place on or after 6 April 2002 (see CG65860 - CG65864). Example

On 8 August 2002 an individual trader transfers a business as a going concern to a company wholly in return for shares in that company. The only chargeable asset of the business is goodwill, which came into existence when the trader commenced trading on 23 October 1999. There would be a chargeable gain on the disposal of the goodwill were it not for roll-over relief. On 14 May 2003 the individual disposes of his shares.

The qualifying holding period for the shares will be from 8 August 2002 to 14 May 2003, or less than one year. No taper relief will therefore be due on the disposal of the shares.

If a timeous election is made to disapply the roll-over relief (see CG65860-64) then there will be a chargeable gain on the disposal of goodwill at the time of the transfer of the business to the company. The qualifying holding period for the goodwill will be the period from 23 October 1999 to 8 August 2002. There are two whole years in this period.