Corporate intangibles tax treatment

By Tolley
Corporate intangibles tax treatment

The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Corporate intangibles tax treatment
  • Tax treatment of intangibles
  • Generally accepted accounting practice
  • Relief for accounting amounts and tax adjustments required
  • Sale of an intangible asset by a company
  • Assets acquired or realised together
  • Intangible assets and related parties
  • Changes in accounting policy
  • Negative goodwill
  • Election for writing down at fixed rate

Tax treatment of intangibles

The basic rule is that the tax treatment of qualifying intangible fixed assets acquired or created on or after 1 April 2002 broadly follows the accounting treatment under generally accepted accounting practice (GAAP) (see below). This includes amortisation, royalties paid and received, revaluations, and reversals of previous gains and losses. Therefore, for trading intangible assets, the debits and credits in the financial statements will not need to be adjusted in the corporation tax computation. However, major restrictions apply for debits relating to goodwill and customer-related intangible assets depending on the date they were acquired or created, see the Goodwill and other customer-related intangible assets guidance note.

Draft FB 2020 legislation , published on 18 March 2020, proposes to amend the corporate intangibles legislation to allow companies to claim corporation tax relief for pre-FA 2002 intangible fixed assets acquired from related parties from 1 July 2020. This is subject to the existing restrictions that apply to amortisation relief in respect of goodwill and customer-related assets. There will also be transitional rules to counter avoidance where a pre-FA 2002 asset is acquired from a related party on or after 1 July 2020 (including a licence in respect of a pre-FA 2002). The tax treatment for pre-FA 2002 assets is preserved for transfers made between UK companies within the same capital gains group.

For information on which assets fall within the corporate intangibles regime, see the Definition of intangibles guidance note.

For details of a possible income tax charge that may arise on non-UK resident persons who have receipts in respect of certain intangible property, see the Offshore receipts in respect of intangible property guidance note.

Generally accepted accounting practice

GAAP, for the purpose of the tax treatment of intangibles,

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