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HMRC internal manual

Corporate Intangibles Research and Development Manual

Reinvestment relief: computation: old asset chargeable intangible asset: complete realisation of asset: proceeds fully reinvested



Where the expenditure on the replacement assets is at least equal to the realisation proceeds of the old asset the amount available for reinvestment relief is the excess of the proceeds over the cost recognised for tax purposes of the old asset.

The realisation proceeds for this purpose are as defined CIRD13210, which is net of the incidental costs of realisation.

That cost of the asset is the capitalised expenditure on the asset that has been recognised for tax purposes (see CIRD12720). That amount is not reduced by any sums written off the asset under the rules described in CIRD12700 onwards. But it is reduced by sums set off against the proceeds on any previous part realisations of the asset. See Example 3 in CIRD20235.

Asset not appearing in formal balance sheet

The fact that no formal balance sheet was drawn up during the period in which the asset was held does not prevent the acquisition cost from being regarded as capitalised expenditure for reinvestment relief purposes if, on the assumption that a balance sheet had been drawn up during that period, the asset would have appeared in it. Compare CIRD20120 where replacement assets are realised before they can appear in a formal balance sheet.


Assume an asset is purchased for £100 and sold for £120 (net of incidental costs) when its tax value (and value in the accounts) is £30. There is a realisation credit under CTA09/PART8 (see CIRD13250) of £90 (realisation proceeds £120 - tax written down value £30). Expenditure on replacement assets is £130.

Since that expenditure exceeds the realisation proceeds the amount available for relief is the amount by which the realisation proceeds (£120) exceeds the cost of the old asset(£100), which is £20.