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HMRC internal manual

Corporate Finance Manual

HM Revenue & Customs
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Derivative contracts: exclusions from regime: intangible fixed asset contracts

Options or futures over intangible fixed assets

Contracts over intangible fixed assets are excluded from being derivative contracts, but only if they are options or futures. Contracts for differences which have intangible fixed assets as their underlying subject matter are still within the rules. This includes options and futures that can only be cash settled (see CFM50340 and CFM50360).

The reason for this exclusion is that intangible fixed assets are taxed under Part 8 CTA09. The definition of intangible fixed asset in Part 8 includes any option or other right to acquire something which would be an intangible fixed asset once the company owned it. It also includes any option to dispose of an intangible fixed asset. So, if a contract is capable of resulting in the delivery of an intangible fixed asset, any profits or losses which the company makes on the contract will be dealt with under the intangible fixed assets rules.

Some things which an accountant would regard as intangible assets are excluded from the intangible fixed assets regime. The definition of intangible fixed assets in CTA09/S710 ensures that these things are also not intangible fixed assets for the purposes of the derivative contract rules.

The most important exclusion is for financial assets. Financial assets is to be understood in the accountancy sense. It includes money debts and insurance policies.


Maetroon Ltd manufactures and markets a range of cosmetics and beauty products. It considers adding to its range an anti-wrinkle cream currently produced by a small privately owned company. It purchases an option to acquire the formula, trademark and packaging design of the cream. The contract is an option for the purposes of Part 7 CTA09, and its underlying subject matter is intangible fixed assets. It is therefore not within the derivative contract rules. Any gains or losses which Maetroon Ltd makes on the option transaction - including the premium it pays for the options - will be dealt with under the intangible fixed asset rules.