A late change to the Finance Bill will bring back relief for acquired goodwill on the acquisition of businesses with eligible intellectual property from 1 April 2019.
The restoration of relief for goodwill and customer-related assets is a welcomed return of a relief that was withdrawn in July 2015. Although, the new form of relief will be more restricted. It seems that these restrictions may be due to some people abusing the relief to avoid paying tax.
The proposed relief will be given at a fixed rate of 6.5% on up to 6 times the value of any qualifying intellectual property assets in the business being acquired. This includes; patents, registered designs, copyright and design rights. Therefore the qualifying costs will be written off over around 15 years and will not follow the treatment in the company accounts as currently applies to other intangibles.
Quote from Nigel Holland:
“This reinstated relief will be welcomed by many intellectual property intensive businesses. However, it is a shame that there has to be restrictions as prior to the 2015 removal, many people used the relief purely for commercial reasons and not to avoid tax.”