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HMRC internal manual

Business Income Manual

Capital/revenue divide: intangible assets: Corporation Tax intangible assets regime

Provisions overriding the capital/revenue divide for intangible assets

Under the Corporation Tax intangible fixed assets regime, capital receipts and expenditure relating to intangible assets and intellectual property are normally brought into the computation of trading profits in accordance with their accounting treatment. The capital/revenue divide therefore has no effect for assets within the regime.

The legislation is at S711-S908 Corporation Tax Act 2009 and applies to goodwill, intellectual property and other intangible assets which (subject to exceptions) are created on or after 1 April 2002 or are acquired from an unrelated party on or after that date. To be within the regime, assets other than goodwill must be created or acquired by the company concerned for use on a continuing basis in the course of its activities. Certain assets are excluded from the regime, principally those already subject to special tax provisions, such as film rights, and assets which are a right over tangible property.

Detailed guidance on the intangible assets rules is in the Corporate Intangibles Research & Development (CIRD) Manual.