Non-trade intangibles

By Tolley

The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Non-trade intangibles
  • Relief for non-trading loss on intangibles
  • Change of ownership and non-trading losses on intangibles

Debits arising in the accounts of the company in relation to intangible assets are, as a basic rule, treated as being allowable debits in the period in which they are charged. There is, however, no relief for these debits where the asset is goodwill or a customer-related asset acquired from a related individual or firm (eg on an incorporation) on or after 3 December 2014, or any goodwill or customer-related asset acquired on or after 8 July 2015 but before 1 April 2019. The debits on these assets are not allowed until the realisation of the asset. On realisation, any debit is treated as a non-trading debit. From 1 April 2019, there is limited relief in very restrictive circumstances. For further details, see the Trade intangibles guidance note.

The tax treatment of debits and credits relating to intangible fixed assets is different depending on whether they relate to an asset used in a trade, a property business, or for non-trading purposes, as summarised below:

  • trading debits and credits form part of trade profits as they are accrued to the profit and loss account (CTA 2009, s 747)
  • debits and credits relating to a property business are treated as part of the expense / income of that property business (CTA 2009, s 748)
  • non-trading debits and credits are pooled. If the non-trading credits exceed non-trading debits then there is a non-trading gain on intangible fixed assets. This is chargeable to corporation tax as income. If non-trading debits exceed non-trading credits, then there is a non-trading loss on intangible fixed assets (CTA 2009, ss 751–752)
Relief for non-trading loss on intangibles

Non-trading losses on intangible fixed assets may be used in the following ways. The losses can be:

    More on Intangible fixed assets: