How intangible fixed assets are taxed—basic principles
Produced in partnership with Anne Fairpo of Temple Tax Chambers
How intangible fixed assets are taxed—basic principles

The following Tax guidance note Produced in partnership with Anne Fairpo of Temple Tax Chambers provides comprehensive and up to date legal information covering:

  • How intangible fixed assets are taxed—basic principles
  • The intangible fixed asset regime
  • Taxation of trading intangible fixed assets
  • Taxation of non-trading intangible fixed assets
  • Expenditure
  • Deemed expenditure
  • Receipts
  • Intangible assets falling outside of the IFA regime

The intangible fixed asset regime

Companies within the charge to corporation tax are generally subject to the intangible fixed assets regime (the IFA regime) in respect of intangible fixed assets created or acquired on or after 1 April 2002. For further information on which assets are included and excluded from the IFA regime, see Practice Notes: What is an intangible fixed asset? and Excluded intangible fixed assets.

The IFA regime largely follows the accounting treatment of expenditure and receipts, and does not distinguish between the different types of intangible fixed assets that are covered by the rules.

The rules assume that the accounts of the company are drawn up in accordance with generally accepted accounting practice (GAAP): that is, in accordance with UK GAAP or international accounting standards (IAS).

If a company has not drawn up GAAP compliant accounts, eg a UK branch of a foreign company that has drawn up its accounts in accordance with the accounting standards of the country of the foreign company, it will be taxed as if it had drawn up GAAP compliant accounts and so will need to restate its accounts for tax purposes.

Taxation of trading intangible fixed assets

Where an intangible fixed asset within the IFA regime is held by a company for the purposes of:

  1. a trade

  2. a property business, or

  3. certain