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Rollover relief, coronavirus - disclosure and deferred tax

Rollover Relief time limits are now 'tight' following the property market in 'lockdown'

Under FRS102, investment property must be measured at fair value with differences flowing through Profit and Loss. With the July 2019 report on Inheritance Tax (IHT) by the Office of Tax Simplification (OTS) suggesting that the trading percentage is increased in line with Capital Gains Tax (CGT), i.e. from 50% to 80% (although this didn’t happen in Budget 2020), even more care must be taken when deciding exactly what is an investment property for tax. There should be no rushing into an accounts disclosure without thinking through the capital taxes position. Another point of interest is Rollover Relief.

With the reduction of the lifetime limit for Entrepreneurs’ Relief (ER) from £10 million to £1 million, Rollover Relief has become more important. Some might argue that with the property market brought to a standstill over the coronavirus pandemic, Rollover Relief is less possible to put in place as the property market is in “lockdown”. However, arguments for the Rollover Relief and deferred tax disclosures are still strong considerations. Firstly, there was a large amount of rollover in the corporate accounts that are currently being prepared by companies and their advisors. Secondly, Rollover Relief is very viable on farmland and woodland where social distancing can be achieved. Many farm sales are still going ahead despite the residential property problems.