Association of Taxation Technicians (ATT) Law CBE Practice Exam 2026 - Free Taxation Technician Practice Questions and Study Guide

A floating charge is a security over a class of assets, present and future, that the company may deal with in the ordinary course of business. The assets in that class can change over time as stock, receivables, and other items move in and out of use. The company can continue to operate and use those assets while the charge is outstanding. Importantly, in priority of payments, a floating charge ranks behind fixed charges, which attach to specific assets.

This description fits floating charges because it captures the idea of coverage of a fluctuating pool of assets rather than a single fixed asset. It also explains why the business can continue to run while security is in place and why the charge’s priority is below fixed charges when enforcement occurs.

The other options describe security interests over specific assets: a charge on a single fixed asset, a mortgage on real property, or a pledge over cash. Those are fixed or possessory arrangements and do not describe the shifting, business-operable pool that characterizes a floating charge.