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Haines Watts Exeter Phone icon 01392 260310

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 01392 260310 or email exeter@hwca.com

About the author

Helen Gale

Helen qualified as a member of the Chartered Institute of Taxation in 1995 and mainly deals with owner-managed businesses of various sizes. She previously worked at Haines Watts Bristol for over 12 years, before relocating to the Exeter office in 2019. Helen is responsible for overseeing the tax department and all tax-related activities to ensure compliance with HMRC regulations and providing clients with helpful information across the four offices in Exeter, Crediton, Okehampton and Launceston.

Heading up the tax department, Helen believes their role is to support colleagues and directly to provide clients with good advice, to deal with their affairs in a timely and efficient way and to build enduring relationships. We want our clients to feel valued and endeavour to meet their expectations.

Tax is a wonderfully illogical and highly complex subject and it’s ever changing. Rarely are there two days the same – it’s good that way!

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

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