Compulsory Purchase Orders: Opportunity to tax efficiently diversify?

2nd January 2018


With numerous businesses currently being forced to sell property under compulsory purchase orders (COP’s), a little known tax rule may be of assistance in enabling you to diversify your investment in your trade into a buy-let-investment without incurring any tax:

Business asset rollover relief is a long established rule which allows traders to defer paying capital gains tax (or corporation tax) on the gain arising from the sale of property used in a business if the proceeds are fully reinvested, within 3 years, into new land to be used in the business. With CPO sales, however, this ‘new land’ does not have to be used in the business, so a residential dwelling purchased to let would, rather generously, qualify. As many businesses, particularly farmers, seek to diversify from trading activities to investment activities, as they approach retirement, help from the taxman is always welcome.

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