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Finance Act 2012

Section 37: Roll-Over Relief


1.Section 37 preserves the availability of capital gains roll-over relief in relation to farmers’ payment entitlements under the European Union (EU) Single Payment Scheme following changes to the Scheme in 2009.

2.The section also allows for future changes to the relevant classes of assets in roll-over relief to be made by secondary legislation.

Details of the Section

3.Subsection (1) amends class of assets 7A (payment entitlements under the single payment scheme) in section 155 of the Taxation of Chargeable Gains Act 1992 (TCGA) to reflect a change in the EU Regulations governing the scheme.

4.Subsection (2) replaces section 86(2) of Finance Act (FA) 1993 and inserts subsections 2A and 2B. The new subsection (2) allows the Treasury to amend section 155 of TCGA 1992 by statutory instrument so as to add classes of assets or amend existing classes. New subsection (2A) prevents any order being made under the power in subsection (2) which limits classes of assets qualifying for roll-over relief. New subsection (2B) allows for reasonable consequential amendments to be made to section 156ZB (interaction with corporation tax roll-over relief in cases of realisation and reinvestment) of, or Schedule 7AB (roll-over of degrouping charge on business assets) to, TCGA 1992 in line with those changes made through new subsection (2).

5.Subsection (3) repeals an earlier amendment to section 86(2) of FA 1993, which is superseded by subsection (2) above.

6.Subsection (4) applies the change in subsection (1) retrospectively to the time of the change in the EU Regulations in 2009 providing for a continuous availability of capital gains tax roll-over relief for single payment scheme payment entitlements.

Background Note

7.Roll-over relief (as the reliefs at sections 152-159 of TCGA 1992 are commonly referred to) permits the deferral of some or all of a chargeable gain on the disposal of a qualifying business asset where the consideration received for that business asset is wholly or partly applied in acquiring replacement qualifying business assets.

8.Qualifying business assets are listed in section 155 TCGA 1992. Class 7A refers to the single payment scheme and, more specifically, the EU Regulation under which payments were previously made (Regulation (EC) 1782/2003 of 29 September 2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers).

9.Regulation (EC) 1782/2003 was withdrawn from 1 January 2009 and replaced by Regulation (EC) 73/2009. This meant that without an amendment to class 7A, as listed in section 155 of TCGA 1992, payments made through the single payment scheme would no longer qualify for roll-over relief.

10.Subsection 86(2) of FA 1993 provides a power for new classes of assets to be added to the list of those qualifying for roll-over relief by Treasury Order; an amendment to an existing asset requires primary legislation through the Finance Act.

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