A client I recently took over rents out residential properties. He’s not registered as a self-employed business, the rent has always just been entered as rental income on his tax return. He is looking to sell the properties and asked about rolling over the gains. I said that as it’s not a trade he wouldn’t be able to. He argued that it is a trade so he should be able to. I can find nothing to do with rollover relief that determines the definition of a trade - I’m assuming that as he isn’t registered as self-employed and paying National Insurance contributions on the rental profits this would be the qualifying factor. Can anyone advise if this is correct or if there’s any way he can get rollover relief?

Arthur Weller replies:
You are correct. This rental activity of your client may possibly be classed as a ‘business’, but it is not a ‘trade’ and, therefore, rollover relief applicable to trades does not apply to his situation. Rollover relief for investment properties is only applicable in two circumstances: (a) qualifying furnished holiday lettings; and/or (b) compulsory purchase.