When your limited company acquires goodwill or intangible assets — whether through buying another business, acquiring intellectual property, or developing brands internally — the Corporation Tax treatment can be surprisingly complex. Get it right and you'll unlock valuable tax deductions. Get it wrong and HMRC could challenge your return.

This guide explains how goodwill and intangible assets are taxed, what relief is available, and how to report them on your CT600.

What counts as an intangible asset?

For Corporation Tax purposes, intangible assets include:

Goodwill — the premium paid above the fair value of a business's net assets
Patents and patent rights
Trademarks and brand names
Copyrights and design rights
Know-how and trade secrets
Customer lists and relationships
Domain names and websites
Licences and franchises
Software (both purchased and internally developed)

Physical assets like machinery, buildings, and vehicles are not intangible assets — they fall under capital allowances instead.

The intangible fixed assets regime (Part 8 CTA 2009)

The Corporation Tax treatment of intangible assets is governed by Part 8 of the Corporation Tax Act 2009 (CTA 2009). This regime applies to assets created or acquired on or after 1 April 2002.

Under this regime, debits (costs) and credits (income) relating to intangible assets are taxed on the same basis as they appear in the company's accounts — with some important exceptions.

Key principle: accounts-based treatment

If your company amortises an intangible asset in its accounts (spreading the cost over its useful life), that amortisation charge is generally allowable as a deduction for Corporation Tax purposes. This is fundamentally different from tangible assets, where accounting depreciation is disallowed and replaced by capital allowances.

How goodwill is treated

Goodwill is the most common intangible asset companies encounter, typically arising when you buy another business for more than its net asset value.

Purchased goodwill

When your company buys goodwill:

Amortisation is deductible — if you amortise goodwill in your accounts, the charge reduces your taxable profits
Impairment is deductible — if you write down goodwill due to impairment, that write-down is generally allowed
On disposal, any gain is taxable and any loss is deductible

The related-party restriction

There's a critical restriction on goodwill acquired from related parties (connected persons). Since July 2015, Corporation Tax relief on amortisation of goodwill and certain other customer-related intangible assets acquired from related parties is not available.

This means if you buy a sole trader business that you personally owned, or acquire goodwill from a connected company, you cannot claim tax relief on amortising that goodwill. This is one of the biggest pitfalls in this area.

Related parties include:

A sole trader incorporating their business
Connected companies under common control
Transactions between a company and its participators (shareholders/directors)

Goodwill acquired before July 2015

If your company acquired goodwill from a related party before 8 July 2015, the old rules still apply and amortisation relief may still be available. The transitional rules are complex, so check the specific dates carefully.

Fixed-rate election: the 4% writing-down allowance

If you don't amortise an intangible asset in your accounts (for example, if you treat goodwill as having an indefinite useful life), you can elect for a fixed-rate writing-down allowance of 4% per year on the cost of the asset.

This election is made on a per-asset basis and is irrevocable. It gives you a guaranteed annual deduction even when your accounts show no amortisation charge.

When to use the 4% election

The fixed-rate election is useful when:

Your accounting policy doesn't amortise goodwill (common under FRS 102 Section 1A for small companies that choose the indefinite life approach)
The 4% rate gives a better result than your accounting amortisation rate
You want certainty over the annual tax deduction

How to calculate the deduction

The 4% applies to the original cost of the asset (not the written-down value):

Year	Cost	4% deduction	Cumulative relief
1	£100,000	£4,000	£4,000
2	£100,000	£4,000	£8,000
3	£100,000	£4,000	£12,000
...	...	...	...
25	£100,000	£4,000	£100,000

Relief runs for up to 25 years until the full cost is relieved.

Rollover relief for intangible assets

If your company sells an intangible asset and reinvests the proceeds in a new intangible asset, you can claim rollover relief to defer the taxable gain. This works similarly to rollover relief for tangible assets under TCGA 1992, but operates within the Part 8 regime.

Conditions for rollover relief

The old asset must be sold and the new asset acquired within a specified window (12 months before to 3 years after the sale)
Both assets must be intangible fixed assets within Part 8
The relief is optional — you must claim it
The gain is deferred by reducing the cost of the new asset

Internally developed intangible assets

If your company creates intangible assets internally (for example, developing software, building a brand, or generating know-how), the tax treatment depends on whether the costs are capitalised in your accounts.

Capitalised development costs — amortisation is deductible, following the accounts-based approach
Costs written off to profit and loss — these are deducted as allowable expenses in the period they're incurred

You might also qualify for R&D tax relief if the work involves advancing science or technology, which provides enhanced deductions or tax credits.

Pre-April 2002 assets

Intangible assets created or acquired before 1 April 2002 fall outside the Part 8 regime entirely. Instead, they're treated as chargeable assets under the capital gains rules:

No amortisation deduction is available
Gains and losses on disposal are computed under the chargeable gains rules
Indexation allowance may apply (frozen at December 2017)

If your company holds very old intangible assets, you need to identify the correct regime before claiming any relief.

Reporting on the CT600

Intangible asset debits and credits are reported on the CT600 and may also require supplementary pages:

Main CT600

Box 145 (Trading profits) — amortisation deductions for intangible assets used in the trade feed into trading profits (they reduce the profit figure)
Box 170–175 (Capital gains) — gains on disposal of intangible assets that fall under the old (pre-2002) rules go here

Computations

In your tax computation (which accompanies the CT600), you should:

Add back accounting amortisation in the accounts-to-tax reconciliation
Deduct the allowable amount (either the same amortisation figure, or the 4% fixed rate if elected)
Separately calculate any disposal gains/losses

iXBRL accounts

Your iXBRL-tagged accounts should correctly tag intangible asset balances, amortisation charges, and any impairments. HMRC's systems cross-reference these tags against the CT600 figures.

Common mistakes to avoid

1. Claiming relief on related-party goodwill post-July 2015 This is the most common error. If you incorporated a sole trader business and purchased the goodwill, amortisation relief is almost certainly blocked.

2. Forgetting the 4% election If your accounts don't amortise goodwill, you're missing out on relief unless you make the fixed-rate election. This election should be made on the CT600 for the first period the asset is held.

3. Mixing up regimes Assets straddling the April 2002 boundary need careful treatment. Applying Part 8 rules to a pre-2002 asset (or vice versa) will produce the wrong tax result.

4. Not identifying all intangible assets on acquisition When buying a business, the purchase price should be allocated across all identifiable intangible assets (customer lists, brands, know-how) before any residual amount is treated as goodwill. Proper allocation can maximise relief.

5. Ignoring impairment reviews If goodwill or an intangible asset has lost value, an impairment charge in the accounts is generally tax-deductible. Not reviewing for impairment means missing potential relief.

Practical example

Scenario: Your company buys a competing business for £200,000. The net tangible assets are worth £120,000. The purchase price is allocated as:

Asset	Value
Tangible assets (equipment)	£120,000
Customer list	£30,000
Goodwill	£50,000
Total	£200,000

Tax treatment:

Equipment (£120,000) — claim capital allowances, potentially 100% through the Annual Investment Allowance
Customer list (£30,000) — amortise over estimated useful life (say 5 years = £6,000 p.a. deduction), or elect for 4% fixed rate (£1,200 p.a.)
Goodwill (£50,000) — if acquired from an unrelated party, amortise over estimated useful life or elect for 4% (£2,000 p.a.). If from a related party (post-July 2015), no relief available

Using Taxpipe to file

When filing your CT600 through Taxpipe, the platform guides you through entering intangible asset figures. Your tax computation is generated automatically, ensuring amortisation deductions and any disposal adjustments are correctly reflected in the return.

If you're filing your CT600 yourself, make sure your accountant or bookkeeper has properly categorised intangible assets in the accounts before you start.

Frequently asked questions

Can I claim tax relief on goodwill from incorporating my sole trader business?

Not if the incorporation happened after 8 July 2015. The related-party restriction blocks Corporation Tax relief on amortisation of goodwill acquired from connected persons, which includes a sole trader incorporating their own business.

What's the difference between amortisation and the 4% writing-down allowance?

Amortisation follows your accounting policy — the rate at which you spread the cost in your accounts. The 4% writing-down allowance is a fixed alternative you can elect for, providing 4% of original cost each year regardless of what your accounts show. You use one or the other, not both.

Do I need to file supplementary pages for intangible assets?

Not specifically for intangible assets. The debits and credits feed into the main CT600 boxes (usually trading profits). However, if there are capital gains on pre-2002 assets, you'll need the capital gains supplementary pages.

Can I claim rollover relief when replacing one patent with another?

Yes, provided both patents qualify as intangible fixed assets under Part 8 CTA 2009 and the timing conditions are met. The gain on the old patent is deferred by reducing the base cost of the new one.

How do I treat software purchases?

Purchased software is an intangible asset. You can amortise it over its useful life (typically 3–5 years) and claim the deduction, or elect for the 4% fixed-rate allowance. If the software cost is immaterial, many companies expense it directly to profit and loss, which is also deductible.

What if my company's goodwill is worth less than what we paid?

You should recognise an impairment charge in your accounts. This impairment is generally deductible for Corporation Tax, reducing your tax bill. Review goodwill annually for indicators of impairment.

Corporation Tax on Goodwill & Intangible Assets