Amortisation of Goodwill

Question.

 

I have heard that we can now get corporation tax relief for the amortisation of goodwill, is this true?

 

Answer.

 

Tax relief was withdrawn in 2015 for companies trying to write-off the cost of purchased goodwill and certain customer-related intangible assets. Before that time relief was available on business acquisitions for purchased goodwill, in the same way as for the acquisition of other intangible assets.

 

The Finance Bill 2019 provides relief for goodwill and relevant intangible assets acquired as part of the acquisition of a business on or after 1 April 2019, where they are acquired alongside qualifying intellectual property (IP) assets. The proposed relief applies at a fixed rate of 6.5% per annum on cost, on an amount up to 6 times the value of any qualifying IP assets that have been acquired. For the purpose of the new relief, the categories of IP that are eligible would broadly correspond to the existing definition of IP and include patents, registered trademarks, registered designs, and copyright or design rights.

 

The new legislation continues to restrict relief on amortisation of goodwill on an incorporation event. In addition, no relief would be available where the relevant asset is not acquired as part of a business acquisition or, where there is a business acquisition, but no qualifying IP assets for the continuing use in the business are acquired as part of the transaction.

 

The advice above is specific to the facts surrounding the questions posed. Neither PKF-FPM nor the contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies.

 

Get in touch with Emma Murphy via email e.murphy@pkffpm.com