ACCA Taxation (F6) Practice Exam

Which relief applies to both companies and individuals for capital gains tax purposes?

1. Gift holdover relief

2. Principle private residence relief

3. Rollover relief

4. Business asset disposal relief

The correct answer is: Rollover relief

Rollover relief is indeed applicable to both companies and individuals for capital gains tax purposes, making it the correct choice. This relief allows taxpayers to defer paying capital gains tax on the disposal of a qualifying asset when the proceeds are reinvested in a new asset of a similar nature. This mechanism is especially beneficial as it encourages reinvestment in business assets, aiding growth and continuity without the immediate tax burden. When an individual or company sells a qualifying business asset and buys a replacement asset, this relief can be claimed to roll over any gain, postponing the tax obligation until a future sale of the new asset. This commonality for both individuals and companies distinguishes rollover relief from others that may specifically target only one group or the other. In contrast, gift holdover relief primarily applies to individuals who give assets as gifts, and it allows them to defer the capital gains tax liabilities on the gift until the recipient disposes of the asset. Principal private residence relief focuses on individuals (and not companies) and provides relief for gains made on the sale of one's main home. Business asset disposal relief is aimed specifically at individuals disposing of shares or assets used in a business, thus not applicable to companies.