ACCA Advanced Taxation (ATX) Practice Exam

For individuals, what is the status of BADR if there is a chargeable gain after ROR?

1. It may still be available

2. It is always available

3. It is not available on individual assets

4. It is only available with special exemptions

The correct answer is: It is not available on individual assets

The correct understanding of the status of Business Asset Disposal Relief (BADR) in the context of individuals and chargeable gains after the application of a relief called Rollover Relief (ROR) highlights a key aspect of UK tax law. When an individual realizes a chargeable gain, BADR is not applicable if the asset title relates to an individual asset rather than a business context. BADR is typically designed for individuals disposing of all or part of their business, allowing them to benefit from a reduced rate of Capital Gains Tax on qualifying disposals of business assets as long as certain conditions are satisfied. In a scenario where a chargeable gain has occurred after ROR, it implies that the asset in question isn't being treated under the specific allowances prescribed for business assets when it does not meet the qualifying criteria for BADR. The implication here is that if an individual is dealing with personal assets rather than business assets or if the disposal does not meet the relief requirements, BADR would not be available. Thus, understanding the distinctions between business assets and personal assets, as well as the specific relief guidelines applicable, is crucial for accurately applying tax relief provisions like BADR.