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Capital versus Revenue expenditure toolkit

From:
HM Revenue & Customs
Published
1 July 2026
Updated:
1 July 2026 - See all updates

Corporate intangible assets

Provides checks to make and what risks and mitigations to consider, including explanations and examples for corporate intangible assets.

Check if the correct tax treatment has been followed for any amortisation of goodwill acquired by a company

Risk

The goodwill of a business carried on by a company or a related party at any time before 1 April 2002 does not qualify for inclusion within the corporate intangible assets regime. Relief is therefore not available for amortisation of this goodwill until it is acquired by an unrelated company after that date.

Mitigation

Where a company’s accounts and tax computations include any deductions in respect of goodwill, consider the history of the goodwill and its acquisition by the company. If the goodwill was that of a business carried on by any party before 1 April 2002, then it does not fall within the corporate intangible assets regime until it has been acquired by an unrelated party, and until that time any amortisation of it should be disallowed in computing taxable profits.

If a company acquires the goodwill from a related individual or firm (‘goodwill on incorporation’) between 3 December 2014 and 7 July 2015 then the amortisation should also be disallowed, even if the business started after 1 April 2002. Any part of the goodwill amortisation that relates to goodwill previously purchased by the individual or firm from an unrelated party may still be an allowable deduction.

All amortisation for goodwill acquired between 8 July 2015 and 31 March 2019 should be disallowed regardless of when the goodwill was created and from which party it was acquired.

For goodwill acquired on or after 1 April 2019 relief is available unless it is goodwill acquired from a related individual or firm. The goodwill must be acquired together with qualifying intellectual property (IP) and both must belong to the same business that is being acquired. Where these conditions are met the cost of goodwill up to a limit of 6 times the value of the qualifying IP acquired can be relieved at a fixed rate of 6.5%. The Corporate Intangibles Research and Development Manual — CIRD44050 provides further guidance on restrictions for goodwill and relevant assets.

The restrictions introduced in 2014, 2015 and 2019 apply to all relevant assets, including goodwill, customer related intangible assets such as; customer information, customer relationships and unregistered marks, signs and logos, and licenses in respect of those assets.

Explanation

The corporate intangible assets regime affects assets created or acquired from an unrelated party on or after 1 April 2002. UK accounting standards consider that goodwill and intangible assets have a finite useful life and so should be amortised on a systematic basis over those lives. For assets falling within the corporate intangible assets regime the tax treatment generally followed that accounting treatment and allowed tax relief for the amortisation. Changes to the regime made in 2014, 2015 and 2019 now mean that the tax deductions for goodwill amortisation and fixed rate deductions are more limited.

As an alternative to following the accounting treatment a company may elect for deductions at a fixed rate of 4 per cent per year of the tax cost of a particular intangible asset. However, the 2014 and 2015 goodwill restrictions also restrict fixed rate deductions.

Further information

Check if the correct tax treatment has been followed for the transfer or licensing of an asset within the corporate intangible assets regime either to or from a related party

The corporate intangible assets regime affects assets created or acquired on or after 1 April 2002. In general, the tax rules relating to such assets follow the accounting treatment. Where expenditure on qualifying assets is written off there is usually a corresponding tax deduction. Likewise, the taxation of disposals of qualifying intangible assets will follow the accepted accounting treatment.

The capital versus revenue distinction is not relevant for the intangibles regime. However, it may be relevant where the asset or expenditure is excluded or subject to special rules. For example, there are special rules for expenditure on computer software or on research and development.

Risk

Where there is a transfer of an asset between related parties, and the asset is a chargeable intangible asset in the hands of at least one of those parties, the transfer is generally deemed to have taken place at market value for both parties. There is also a valuation rule that applies to the grant of a licence between related parties on or after 22 November 2017. If the existence of a related party transaction of this kind is not identified then the wrong amount may be taken into account for tax purposes.

Mitigation

Establish whether any disposals or acquisitions by the company to or from a related party during the accounting period were of assets within the corporate intangible assets regime. For any such transaction, ensure that the amount brought into account for tax purposes reflects the market value of the asset at the date of the transfer.

Explanation

When a company transfers an asset within the regime to a related party, or acquires such an asset from a related party, the transaction is deemed to have taken place at market value in most cases. Rules were also introduced from 22 November 2017 to remove any tax advantages where licenses are granted between related parties. Further changes were made to the rules for transfers and licences occurring on or after 1 January 2026.

The notion of a ‘related party’ is similar to that of a ‘connected person’ used in other areas of specific tax legislation but is modified in a number of respects to reflect the particular requirements of the corporate intangible assets regime.

Further information