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.

However, this accounts-based principle is subject to significant restrictions for goodwill and certain customer-related intangibles — restrictions that changed twice in recent years, as explained below.

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.

The tax treatment of goodwill depends critically on when your company acquired it. The rules changed significantly in July 2015 and again in April 2019.

Goodwill acquired before 8 July 2015

Under the original Part 8 rules:

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
Fixed-rate election — you can elect for a 4% per year writing-down allowance instead of following your accounting amortisation rate
On disposal, any gain is taxable and any loss is deductible

Goodwill acquired on or after 8 July 2015 and before 1 April 2019

From 8 July 2015, Corporation Tax relief on the amortisation and impairment of goodwill — and relevant assets (which includes customer lists and customer relationships) — was withdrawn entirely. This restriction applies regardless of whether the goodwill was acquired from a related party or a completely unrelated third party. There is no fixed-rate election available as an alternative.

If your company bought a business and paid a goodwill premium during this period, no deduction is available for the amortisation or any impairment write-down of that goodwill or any customer list acquired with it.

Goodwill acquired on or after 1 April 2019

Some relief was reinstated from 1 April 2019, but only in limited circumstances. A company can claim relief on goodwill and relevant assets acquired on or after this date only where:

The acquisition also includes qualifying intellectual property — principally patents, plant variety rights, or supplementary protection certificates
The goodwill or relevant asset was not acquired from a related party (connected person)

Where these conditions are met, the deductible amount is a fixed rate of 6.5% per year on the cost of the goodwill or relevant asset. However, the total relief is further capped at an amount equal to 6 times the cost of the qualifying IP assets also acquired in the same transaction.

In practice, most small business acquisitions do not involve patents or similar qualifying IP. Where the business being purchased has no qualifying IP, no relief is available on the goodwill even after 1 April 2019.

On disposal of goodwill

When your company sells goodwill or a relevant asset held under Part 8, the proceeds create a taxable credit. Losses on disposal are allowable. These are reported as non-trading gains on intangible fixed assets in the CT600 (see the Reporting section below), not as chargeable gains.

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

For intangible fixed assets other than goodwill and relevant assets (i.e. patents, trademarks, copyrights, know-how, software, domain names, and licences), you can elect for a fixed-rate writing-down allowance of 4% per year on the cost of the asset as an alternative to accounting amortisation.

This election is made on a per-asset basis and is irrevocable. It gives a guaranteed annual deduction even when your accounts show a different amortisation rate.

When to use the 4% election

The fixed-rate election is useful when:

Your accounting amortisation rate is slower than 4% and you want faster tax relief
Your company follows IFRS and holds intangible assets treated as having an indefinite useful life (such as a well-established brand), meaning accounts show no annual charge
You want certainty over the annual tax deduction regardless of any future changes to your accounting policy

Note: Under FRS 102 (which applies to most small companies), goodwill and other intangible assets must be amortised over their useful lives. Where the useful life cannot be reliably estimated, FRS 102 presumes a maximum of 10 years. FRS 102 does not permit an indefinite useful life for goodwill.

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:

Main CT600

Box 155 (Trading profits) — amortisation deductions for intangible assets used in the trade feed into the trading profit calculation; they reduce the profit figure that goes in this box
Box 195 (Non-trading gains on intangible fixed assets) — gains on disposal of intangible assets under Part 8 that are not part of your trade go here; non-trading losses go in Box 265
Boxes 210–220 (Chargeable gains) — gains on disposal of intangible assets that fall under the old (pre-April 2002) capital gains rules go here; Box 210 is gross chargeable gains, Box 215 is allowable losses, and Box 220 is the net figure
Box 640 — tick this if your company has written down or sold intangible assets during the period

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, the 4% fixed rate if elected, or the 6.5% rate for qualifying goodwill from April 2019)
Show any permanent differences where relief is blocked (e.g. goodwill acquired after 8 July 2015 with no qualifying IP)
Separately calculate any disposal gains or 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. Assuming goodwill relief is only blocked for related-party acquisitions

This is a widespread misunderstanding. Since 8 July 2015, Corporation Tax relief on amortisation of goodwill — and customer-related intangibles — has been blocked for acquisitions from any party, related or unrelated. The common scenario of a sole trader incorporating their business and transferring goodwill is caught by both the general restriction and the related-party bar.

2. Overlooking the 4% election for non-goodwill intangibles

For patents, trademarks, software, and other intangibles (other than goodwill and customer-related assets acquired after 8 July 2015), the fixed-rate 4% election can give faster tax relief than your accounting amortisation rate. This election should be considered 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. Even where those assets attract no current relief, correct identification matters for calculating disposal proceeds and for determining whether qualifying IP is present to unlock the April 2019 partial reinstatement.

5. Treating goodwill impairment as deductible after 8 July 2015

For goodwill acquired on or after 8 July 2015, an impairment charge in your accounts is not deductible for Corporation Tax. The same restriction that blocks amortisation relief also blocks impairment relief. The write-down will be a permanent difference in your tax computation. For goodwill acquired before that date, impairment remains generally deductible.

Practical example

Scenario: Your company buys a competing business in 2025 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 (acquisition on or after 8 July 2015, no qualifying IP in the purchased business):

Equipment (£120,000) — claim capital allowances, potentially 100% through the Annual Investment Allowance
Customer list (£30,000) — a "relevant asset" under Part 8. No amortisation or impairment relief is available: the restriction introduced in July 2015 blocks all relief on customer-related intangibles acquired from any party, and this acquisition includes no qualifying IP to trigger the April 2019 partial reinstatement
Goodwill (£50,000) — no amortisation or impairment relief available for the same reason: no qualifying IP was included in the purchase, so the 6.5% relief introduced in April 2019 does not apply

The £80,000 paid for the customer list and goodwill will be a permanent non-deductible cost, disclosed as a reconciling item in the accounts-to-tax reconciliation each year. The only tax event on these assets is on eventual disposal.

If the same acquisition had taken place before 8 July 2015, amortisation over the estimated useful life (or the 4% fixed-rate election) would have been available on both the customer list and the goodwill — giving annual deductions until the full cost was relieved.

Filing your CT600

Intangible asset figures feed through your tax computation into the relevant CT600 boxes — mainly Box 155 for trade-related amortisation and Box 195 for non-trading disposal gains. Make sure your accountant has correctly categorised any intangible assets and that your accounts-to-tax reconciliation clearly shows any permanently blocked amounts before you start the return.

Frequently asked questions

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

Almost certainly not if the incorporation happened after 8 July 2015. The general restriction introduced at that date blocks amortisation relief on goodwill acquired from any party — related or unrelated. A sole trader incorporating their own business is also a related party transaction, which creates a further bar under the rules and prevents even the limited 6.5% qualifying-IP relief reinstated from April 2019.

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 on qualifying intangible assets (not goodwill or customer-related intangibles acquired after 8 July 2015), providing 4% of original cost each year regardless of what your accounts show. You use one or the other, not both. For qualifying goodwill acquired on or after 1 April 2019 with the necessary IP, the fixed rate is 6.5%, not 4%.

Do I need to file supplementary pages for intangible assets?

No. There are no supplementary CT600 pages specific to intangible assets. Amortisation deductions feed into the trading profit in Box 155. Non-trading gains and losses on disposal of Part 8 intangibles go in Box 195 and Box 265 respectively on the main form. For pre-April 2002 intangible assets treated under the capital gains rules, gains and losses go in Boxes 210–220 on the main form.

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 under Part 8. 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?

The answer depends on when the goodwill was acquired. For goodwill acquired before 8 July 2015, an impairment charge recognised in your accounts is generally deductible for Corporation Tax.

For goodwill acquired on or after 8 July 2015, impairment is not deductible — the same restriction that blocks amortisation relief also blocks impairment. The write-down will be a permanent difference in your tax computation, with no reduction in your Corporation Tax bill.

Corporation Tax on Goodwill & Intangible Assets