The key difference between rollover relief and holdover relief lies in their application and duration of relief provided.

Rollover relief primarily applies to businesses and allows them to defer paying tax on certain assets, such as buildings used in trade, by reinvesting the sale proceeds into replacement assets. This deferral is contingent upon reinvestment within a specified timeframe, typically ranging from one year before to three years after the disposal of the original asset. If part of the sale proceeds is retained, an immediate gain crystallizes, but the balance of the gain can be deferred. Rollover relief can be claimed if the replacement asset is a freehold building or goodwill. The deferred gain is then subtracted from the cost of the replacement asset, effectively reducing its base cost. This deferral lasts until the replacement asset, such as the freehold building or goodwill, is eventually sold.

On the other hand, holdover relief is an option when the sale proceeds are reinvested in qualifying depreciating assets, like fixed plant and machinery or leasehold buildings, with a lifespan of 60 years or less. Unlike rollover relief, holdover relief temporarily suspends the gain from taxation until one of three events occurs: the sale of the replacement asset, the asset becoming obsolete, or 10 years after the replacement asset is acquired. Notably, the cost of the depreciating asset remains unchanged, and any capital loss incurred upon its sale cannot be claimed if capital allowances were available earlier. Holdover relief provides a maximum deferral period of 10 years, after which the gain becomes taxable.

In essence, while rollover relief offers a permanent deferral of gains until the eventual sale of the replacement asset, holdover relief provides temporary relief for up to a maximum of 10 years, with specific conditions determining the duration of the deferral.