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Haines Watts Bristol Phone icon 0117 974 2569

In July 2015, HMRC tightened the rules for companies getting tax relief on goodwill. As sometimes happens when HMRC introduce new rules, there are unforeseen negative impacts where they hadn’t intended and so, with effect from 1 April 2019 the rules have changed for some acquisitions of goodwill and relevant assets.

Relief is now available on purchases made after 1 April 2019 if the:

  • Goodwill and relevant assets are purchased when you buy a business with qualifying intellectual property;
  • Business is liable to corporation tax
  • Relevant assets (including goodwill) are included in the company accounts.

Tax relief available – relief is a fixed rate of 6.5% a year based on the lower of the cost of the relevant asset or 6 times the cost of any qualifying IP assets in the business purchased.

Relief is given yearly until the limit is reached.

Claims must be included in the company’s corporation tax return.

Restrictions will still apply to goodwill and relevant assets purchased:

  • Without qualifying IP
  • Without a business
  • From a related individual, firm or partnership which are internally-generated
  • From a related party that has been subject to a previous restriction.

More information can be found at HMRC’s website using the following link www.gov.uk/guidance/corporation-tax-relief-on-goodwill-and-relevant-assets.

If you have any questions or would like to discuss this in more detail, please get in touch.

Want to know more? Call us on 0117 974 2569 or email bristol@hwca.com

About the author

Helen Gale

Helen qualified as a member of the Chartered Institute of Taxation in 1995 and has dealt, mainly, with various sized owner-managed businesses. Helen is responsible for overseeing the tax department and all tax-related activities to ensure compliance with HMRC regulations and to provide clients with helpful information.

In her spare time, Helen likes gardening, country walks and spending time with her family and friends

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