Changes in the pipeline for the corporate intangibles fixed assets regime

As announced in the Autumn Budget, HMRC has launched a consultation document on a review of the corporate intangibles fixed assets regime (19 February 2018).


The Intangible Fixed Assets regime (IFA regime) was introduced from 1 April 2002 and this fundamentally changed the way the UK corporation tax system treats intangible fixed assets (such as copyrights, patents and trademarks) and goodwill.

Prior to the introduction of the IFA regime the tax system did not allow tax relief for amortisation or impairment of IFAs. The 2002 changes provided companies with relief for the cost of acquiring intangible fixed assets and goodwill by allowing a deduction from income for the amortisation and impairment debits recognised in a company’s accounts. It also taxes receipts in respect of IFAs, including disposal proceeds, as income.

There have been some recent changes (see below) in the criteria for tax deductibility and now the government has decided the time is right for a more comprehensive review of the overall regime. This is seen as relevant in light of the growing importance of intellectual property (IP) to the productivity of modern businesses, and the restructuring of IP ownership within multinational groups in response to recent international tax changes.

Recent changes and the effect on small companies

In the Finance Act 2015 the government introduced a new restriction to the IFA regime denying relief for ‘relevant assets’, which include goodwill and those assets that would typically be subsumed within, or closely associated with, the business goodwill:

  • customer information
  • customer relationships
  • unregistered marks or signs
  • a licence in respect of any of these things.

The changes took effect from 8 July 2015 and apply to relevant assets acquired on or after that date. The changes mean that, instead of giving a deduction for expenditure on these relevant assets when the cost is recognised for accounting purposes as amortisation or impairment losses, the IFA regime now only gives a deduction at the time of disposal. Many small companies have taken advantage of the tax deductibility of the amortisation of goodwill which is now not available.

The government made the changes in 2015 as it saw the deductions for amortisation of goodwill as an expensive relief. It also wanted to remove a tax incentive to structure an acquisition of a business as a trade and asset (including goodwill) purchase rather than a share purchase. Again this affected many small companies.

The consultation

The review is asking for comments on a number of issues including the effect on the 2015 changes. The closing date is 11 May 2018.

The full consultation can be found here.

Article from ACCA In Practice