We are often asked for the various dates relating to amortising goodwill for tax in companies. So here is a summary:

From the 1ST April 2002:

Creation, acquisition or enhancement of goodwill could be amortised for tax. Although connected parties transferring goodwill on incorporation could only amortise for tax if the goodwill if had been created by the connected party after 31st March 2002 CTA 2009 Part 8. The deduction could be calculated for the lifetime of the asset or an election could be made for fixed rate deduction of 4%.

From 3rd December 2014:

Connected parties can no longer amortise goodwill FA 2005 S26.

From 8th July 2015:

Relief for all goodwill acquired withdrawn FA 2005(2) S33

From 1st April 2019:

FA2019 S25 introduced a new fixed rate of relief of 6.5% for relevant assets acquired or created on or after 1st April 2019 but with several restrictions for acquired assets.  Broadly, the rules only provide this relief when relevant assets are acquired together with qualifying intellectual property (IP) where these are acquired as part of a business acquisition (but not a related party incorporation).

The main policy design elements for allowing debit relief in respect of goodwill and relevant assets are:

  • Relief for the cost of post-FA 2019 relevant assets is given at a fixed rate of 6.5% per annum under CTA09/PART8/CHAPTER3.
  • For acquisitions, relief is limited to a maximum of 6 times the cost of any qualifying IP acquired as part of a business.  Where the cost of the relevant assets acquired is less than 6 times the cost of qualifying IP no restriction is applied.
  • No amortisation or fixed rate relief under Chapters 3 or 15 where relevant assets are not acquired with qualifying IP, or not acquired with a business.
  • A restriction in relation to post-FA 2019 relevant assets for related party incorporations similar to that previously provided by CTA09/S849B.
  • The effect of the CTA09/S816A restrictions is preserved for relevant chargeable intangible assets acquired or created between 8th July 2015 and 31 March 2019.

Points to note

The FA2019 rules only apply to relevant assets acquired or created on or after 1 April 2019.  For acquisitions of relevant assets before 1st April 2019 the following rules will apply:

  • For acquisitions that took place before 3 December 2014 amortisation etc. relief continues to be available after 3 December 2014
  • Incorporations of related party businesses will not be entitled to amortisation etc. relief for relevant assets transferred between 3 December 2014 and 7 July 2015.
  • Acquisitions that took place between 8 July 2015 and 31 March 2019, will not be entitled to amortisation etc. relief in respect of relevant assets, including acquisitions from non-related parties

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