ACCA Advanced Taxation (ATX) Practice Exam

Which of the following is NOT considered a qualifying business asset for gift holdover relief?

1. Sole trader assets

2. Shares in a quoted personal trading company

3. Cash deposits

4. Agricultural property

The correct answer is: Cash deposits

Gift holdover relief allows individuals to defer the capital gains tax (CGT) liability that arises from the transfer of qualifying business assets. To qualify for this relief, the assets must belong to a "business" and typically be involved in trading activities. Cash deposits do not fit this category as they are not classified as business assets that generate trading income or contribute to the active management of a business. Instead, they are considered personal investments or financial assets, which do not qualify for gift holdover relief. On the other hand, sole trader assets, shares in a quoted personal trading company, and agricultural property represent business assets that are actively used in trading activities or directly linked to a trade. These types of assets contribute to generating income from business operations, making them eligible for relief. Therefore, the correct response highlights that cash deposits stand apart from the list of qualifying business assets due to their lack of connection to trading activities.