ACCA Advanced Taxation (ATX) Practice Exam

For tax purposes, are cars and vans classified as moveable assets for rollover relief?

1. Yes, they qualify

2. No, they do not qualify

3. Only specific models qualify

4. Conditionally based on usage

The correct answer is: No, they do not qualify

For tax purposes, cars and vans do not qualify as moveable assets eligible for rollover relief. Rollover relief is designed to allow taxpayers to defer paying tax on gains when they sell qualifying business assets and reinvest the proceeds into new assets. However, the legislation specifically excludes cars from this treatment due to their mixed-use nature, where they can be used for both personal and business purposes. Vans have a slightly different position as they may qualify for capital allowances and can be treated as business assets, but when it comes to rollover relief, the same exclusion applies. The rationale is that cars are typically not considered true business assets in the same capacity as other vehicles or equipment that are strictly used for business purposes. As such, the classification of cars and vans under rollover relief is quite clear: they do not meet the criteria necessary to be classified as "moveable assets" eligible for this tax relief benefit.