Taxation of Chargeable Gains Act 1992 section 154

New assets which are depreciating assets

Section 154 modifies the normal business asset roll-over relief rules where the replacement asset is a depreciating asset, by holding over the gain rather than rolling it into the cost of the new asset.

• Where the replacement asset is a depreciating asset, the gain from the old asset is not deducted from the cost of the new asset but is instead held over and becomes chargeable on the earliest of: disposal of the new asset, cessation of its trade use, or 10 years after its acquisition.
• If the taxpayer subsequently acquires a non-depreciating replacement asset before the held-over gain crystallises, the gain can be rolled over into that new asset instead, and the original claim against the depreciating asset is withdrawn.
• Where only part of the held-over gain can be rolled into the non-depreciating asset, the gain may be split so that the eligible portion is rolled over and the remainder continues to be held over against the depreciating asset.
• An asset is treated as a depreciating asset if it is currently a wasting asset (with a predictable useful life of 50 years or less) or will become one within 10 years.