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A closer look at the withdrawal of tax relief for goodwill

The announcement on 7 July 2015 that tax relief for goodwill purchased by companies after that date was being taken away was seen as an unwelcome development.  However, for companies already claiming a tax deduction on goodwill acquired or created between 1 April 2002 and 7 July 2015, this relief continues.  The restriction on tax relief is not for all intangibles though; intangibles amortisation relief is therefore still available for intellectual property assets such as patents, know-how, registered designs, copyright or design rights.  In addition to this, the relief may in some cases be accelerated by the impact of FRS102/105 which must be adopted for accounting periods commencing after 31 December 2015.  The rules in this area are complicated but if there is a transitional adjustment that is treated as a revision of the accounting estimate and the useful life is shortened as a result, the additional amortisation is allowable when charged.  This could be 2014 or 2015.  It will be worth investing time looking in to this to see whether the bad news on withdrawal of relief on future purchases still has a silver lining.



Date: 15th December, 2015
Author: Cathy Corns


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