ACCA Advanced Taxation (ATX) Practice Exam

Are vehicles like cars and vans considered qualifying assets for rollover relief?

1. Yes, they qualify

2. No, they do not qualify

3. Only certain types of vehicles qualify

4. Only if they are electric

The correct answer is: No, they do not qualify

Vehicles such as cars and vans generally do not qualify as qualifying assets for rollover relief under the tax regulations. Rollover relief is a provision that allows taxpayers to defer paying capital gains tax on the disposal of certain assets, provided they reinvest the proceeds into qualifying replacement assets. Qualifying assets typically include business assets such as land, buildings, and certain types of machinery. The exclusion of cars and vans from qualifying assets is primarily due to the fact that they are often categorized as personal use assets rather than business assets. This distinction is crucial since rollover relief is intended to facilitate the reinvestment in assets that are essential for the conduct of a business. Personal vehicles typically do not meet this criterion, especially when they are primarily used for non-business purposes. While certain vehicles may be specialized and used exclusively for business, the general rule maintains that standard car and van purchases do not qualify for rollover relief. This is important for taxpayers to understand when considering their eligibility for tax relief on asset disposals.