Key takeaways
- Companies get Corporation Tax relief on most intangible assets, such as patents, trademarks, software and customer lists, by following the amortisation in their accounts.
- Alternatively, a company can elect for a fixed 4% a year writing down allowance on an asset.
- Since April 2019, relief on purchased goodwill and customer-related intangibles is generally given at 6.5% a year, if bought with qualifying IP.
- Assets created or acquired from related parties before 1 April 2002 stay in the capital gains regime.
- Gains on selling intangibles can be rolled over into new intangible assets.
Most of a modern company’s value can be intangible: brands, software, patents, know-how, customer relationships and goodwill. Since 2002 companies have had a specific tax regime for these assets, usually giving relief in line with how the assets are written off in the accounts.
Which assets are covered
The corporate intangibles regime covers intangible fixed assets as defined by accounting standards, including:
- patents, trademarks, registered designs and copyright
- software (unless treated as part of computer hardware)
- licences and franchises
- know-how and customer lists
- goodwill purchased on acquiring a business
It does not cover:
- shares, financial assets and interests in land
- assets held for a non-commercial purpose
- assets that were pre-FA 2002 assets: created before 1 April 2002, or acquired after that date from a related party that held them before then
Pre-2002 assets stay within the capital gains regime, which gives no relief for amortisation but taxes gains on sale as chargeable gains.
How relief is given
Following the accounts
By default, the tax deduction mirrors the amortisation or impairment charged in the company’s accounts. If an asset is written off over ten years in the accounts, the tax deduction follows that pattern. No separate capital allowances computation is needed.
The 4% fixed rate election
A company can instead elect, asset by asset, for a fixed 4% a year writing down allowance on cost. This is useful where the accounts do not amortise the asset, for example where it has an indefinite life under accounting standards, or where amortisation is slower than 4%. The election must be made within two years of the end of the accounting period in which the asset was created or acquired, and cannot be revoked.
Goodwill and customer-related intangibles
Relief for purchased goodwill and customer-related intangibles has changed several times:
| Acquired | Relief |
|---|---|
| 1 April 2002 to 7 July 2015 | Follows the accounts (or 4% election) |
| 8 July 2015 to 31 March 2019 | No relief while held; relief only on disposal |
| From 1 April 2019 | Relief at 6.5% a year on cost, but only where the goodwill is acquired with qualifying IP assets such as patents or copyright, and limited to six times the value of that IP |
Goodwill acquired from a related individual on incorporation of a business is generally restricted: relief is not given where it is bought from an individual or firm related to the company, except in limited circumstances. Incorporating sole traders should not expect a deduction for goodwill sold to their own company.
Selling intangible assets
When a company sells an intangible asset within the regime, the difference between the proceeds and its tax written-down value is a trading credit or debit (income or deduction), not a capital gain.
Reinvestment relief
If the company reinvests the proceeds in new intangible assets within one year before to three years after the sale, it can claim reinvestment relief, deferring the taxable credit by reducing the tax cost of the new asset. This mirrors rollover relief for other business assets. See rollover relief.
Groups
Intangible assets can be transferred between members of a 75% group on a tax-neutral basis. When a company leaves a group within six years of receiving an asset on such a transfer, a degrouping charge can arise.
Related reliefs
- R&D tax relief helps with the costs of developing new IP; see R&D tax relief.
- The Patent Box reduces tax on profits from patented inventions to 10%; see Patent Box.
- Sole traders and partnerships are outside this regime; their intangible assets fall under capital gains and, for goodwill, no amortisation relief is available.
Frequently asked questions
Can a company claim tax relief on amortisation of intangible assets?
Yes, for most intangible fixed assets created or acquired from 1 April 2002, relief follows the amortisation in the accounts, or a 4% fixed rate if elected.
Is goodwill tax deductible for companies?
Since April 2019, purchased goodwill can get relief at 6.5% a year, but only when acquired with qualifying IP and subject to limits. Goodwill acquired from related parties, such as on incorporation, is usually restricted.
What is a pre-FA 2002 asset?
An intangible asset that existed before 1 April 2002, or was acquired later from a related party that held it before then. It remains in the capital gains regime.
Can gains on intangible assets be deferred?
Yes. Reinvestment relief defers the taxable credit if the proceeds are reinvested in new intangible assets within the time window.
Sources
Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance in October 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.