Capital gains tax deferment: what it is and how it can help you
When you dispose of business-assets in the UK you may face a charge to Capital Gains Tax (CGT).
But by claiming one of the special reliefs you may obtain capital gains tax deferment – essentially delaying the tax payment until a later date rather than settling it immediately.
In this article we explore how capital gains tax deferment works in the 2025/26 tax year, the qualifying conditions, and how you can plan ahead.
What is capital gains tax deferment?
When a qualifying business-asset is sold and you reinvest or transfer in the right manner, you may be allowed to postpone (defer) the CGT liability rather than paying it straight away.
This kind of capital gains tax deferment is available through reliefs such as Business Asset Rollover Relief and Hold‑over Relief.
These reliefs let you carry the gain forward rather than recognising it immediately.
For many business owners this form of capital gains tax deferment can be a significant planning tool.
When is rollover relief a form of capital gains tax deferment?
Qualifying assets and business trade use
The principal relief for deferring CGT on disposal of business assets is Business Asset Rollover Relief.
If you sell a qualifying “old asset” and purchase a replacement “new asset” within the relevant time window, you may qualify for capital gains tax deferment by rolling the gain into the cost of the new asset.
To qualify:
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You must be carrying on a trade (or the company must be trading) when disposing of the old asset and acquiring the new one.
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Both the old and the new asset must be used in the trade throughout their ownership.
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The replacement asset must be purchased within three years after disposal, or up to one year before disposal.
This mechanism allows capital gains tax deferment because the gain on the old asset is not taxed immediately; instead it is carried forward and reduces the base cost of the new asset.
Time limits and partial reinvestment
If you do not reinvest all the proceeds from the sale of the old asset into the new asset, then only part of the gain may qualify for this capital gains tax deferment.
For example, if you sell an item and only invest part of the disposal proceeds, then the gain is charged on the portion not reinvested and the remainder can be deferred. Also note that the claim must normally be made in the tax return for the year of disposal.
How does hold-over relief deliver capital gains tax deferment?
The second main form of deferment is hold-over relief (sometimes called gift relief) which allows the gain on a disposal of a business asset (often by way of gift or very low consideration) to be deferred so that the recipient takes over the asset and the deferred gain attaches to them.
So rather than paying CGT immediately, the donor and donee jointly elect to hold over the gain. The tax is deferred until the recipient disposes of the asset. This is a form of capital gains tax deferment because the liability is delayed.
Typical circumstances include transferring business assets to a child or another family member, or transferring into a trust (though note there is uncertainty about trust reliefs ahead of the 2025 Autumn Budget).
What’s changed for the 2025/26 tax year?
When planning for capital gains tax deferment it is essential to be aware of recent rule changes:
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The relief documentation for Business Asset Rollover Relief updated in 2025.
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The basic rate of CGT and reliefs are under review, and the future of hold-over relief (especially for gifts into trusts) is uncertain following statements in late 2024.
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The annual exempt amount for CGT (the amount of gain you can realise tax-free) remains very low (for example, only £3,000 for individuals in 2024/25) and remains under pressure for 2025/26.
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For reliefs like Business Asset Disposal Relief (BADR) the lifetime limit remains at £1 million of qualifying gains and the rate remains at 10% for now, but is set to increase to 14% from 6 April 2025 and 18% from 6 April 2026.
Therefore, for anyone seeking capital gains tax deferment in 2025/26, early planning is crucial — especially if you are considering using the reliefs before possible further changes.
Practical steps to achieve capital gains tax deferment
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Review your asset disposals: Are you disposing of a business-asset used in trade (land, buildings, machinery, goodwill)?
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Identify the replacement asset: If you want rollover relief, you must invest in another qualifying asset within the time window (up to one year before disposal or up to three years after).
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Make sure both old and new assets are used wholly in the trade throughout ownership.
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If you are doing a gift or very low consideration transfer, consider hold-over relief: ensure the recipient is UK-resident (for example) and you jointly elect the relief.
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Claim the relief on your Self Assessment tax return (or via the appropriate HMRC form, e.g. HS290 for rollover relief).
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Keep records of the deferred gain: When the replacement asset is eventually disposed of, the deferred gain will crystallise and will be taxed then.
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Consider timing: With potential rule changes ahead and relief rates rising, securing capital gains tax deferment now may be wise.
How we can help you
At Trueman Brown we specialise in helping business owners and companies understand and execute planning for CGT and capital gains tax deferment.
Whether you’re selling an asset and reinvesting, or transferring assets and considering hold-over relief, we can guide you through the qualifying conditions, timing constraints and claim process.
To discuss your situation, please contact us at mark@truemanbrown.co.uk or call 01708 397262.
Our team will review your transaction, check whether you meet the criteria for relief and help you implement the strategy to defer tax effectively.
Frequently Asked Questions (FAQ)
Q1: What exactly does “capital gains tax deferment” mean?
A: It means you delay paying CGT on a disposal of a qualifying business asset by using reliefs such as rollover relief or hold-over relief. Rather than paying tax immediately, you carry the gain forward until a later event (for example, disposal of the replacement asset or recipient’s disposal) triggers the tax liability.
Q2: Can any asset qualify for capital gains tax deferment?
A: No. For rollover relief the asset must generally be used in trade and the replacement asset must also be used in trade. For hold-over relief the asset must be a business asset or certain agricultural or share assets qualifying under the rules.
Q3: What if I only reinvest part of the proceeds—can I still get deferment?
A: Yes, you may get partial capital gains tax deferment for the portion of the gain that you reinvest into a qualifying replacement asset. The portion not reinvested is subject to CGT immediately.
Q4: If I claim hold-over relief, when will I actually pay the tax?
A: With hold-over relief the tax is postponed until the recipient of the asset disposes of it (or other triggering event). Until then the gain remains “held-over”.
Q5: Are these reliefs safe from future changes?
A: Not entirely. While the rules currently stand, there is always the possibility of future legislative changes (for example as signalled for 2026). If you are planning significant disposals or transfers it’s prudent to act sooner rather than later and seek expert advice.
Q6: How do I claim relief to obtain capital gains tax deferment?
A: For rollover relief you typically use the HMRC helpsheet HS290 and claim on your Self Assessment return. For hold-over relief you make a joint election between donor and recipient. Keep full records.
Q7: What about the annual exempt amount and CGT rates for 2025/26?
A: The annual exempt amount is very low (for example £3,000 in 2024/25) and is expected to remain constrained. Meanwhile reliefs such as BADR will see their rate increase (to 14% from 6 April 2025, 18% from 6 April 2026). These broader changes mean that obtaining capital gains tax deferment is increasingly valuable as part of overall planning.
If you’d like to discuss your situation in more detail, please don’t hesitate to contact us at mark@truemanbrown.co.uk or call 01708 397262. We’re happy to help you navigate capital gains tax deferment and ensure you take full advantage of the reliefs available.
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