Chargeable gains for individuals — ACCA Practice Question 05

How to approach this question

Distinguish between the disposal of business assets and the disposal of a part of a business. BADR requires the latter.

Full Answer

D.No, because it is merely a disposal of business assets, not a disposal of the whole or part of a business.✓ Correct

For a sole trader, Business Asset Disposal Relief (BADR) is available on the disposal of the whole or part of a business. The disposal of individual business assets without disposing of the business (or a distinct part of it) does not qualify for BADR. Since Julian is continuing the same trade, he has merely sold assets.

Common mistakes

Assuming that selling a large percentage of assets equates to selling 'part of a business'.

Section A

Julian operates a manufacturing business as a sole trader. He decides to scale down his operations and sells 40% of his factory machinery. He continues to run the business at a reduced capacity. Does this disposal qualify for Business Asset Disposal Relief (BADR)?

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA TX — Taxation Practice Exam 4

More questions from this exam

Section A Julian operates a manufacturing business as a sole trader. He decides to scale down his operations and sells 40% of his factory machinery. He continues to run the business at a reduced capacity. Does this disposal qualify for Business Asset Disposal Relief (BADR)?

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA TX — Taxation Practice Exam 4

More questions from this exam

Section A

Julian operates a manufacturing business as a sole trader. He decides to scale down his operations and sells 40% of his factory machinery. He continues to run the business at a reduced capacity. Does this disposal qualify for Business Asset Disposal Relief (BADR)?