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HMRC releases details about corporation tax relief

HMRC has published guidance about changes to corporation tax relief on goodwill and relevant assets for businesses and tax agents.

HMRC releases details about corporation tax relief
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From 1 April 2019, the corporation tax relief restriction rules for some acquisitions of goodwill and relevant assets changed.

The HMRC recently published guidance for tax agents and businesses, aimed to inform them on what has changed and, more specifically, how to complete a company tax return and include the relief.

Following the changes, businesses can now get relief on purchases made on or after 1 April 2019 if the:

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

Relief is a fixed rate of 6.5 per cent a year on the lower of the cost of the relevant asset or six times the cost of any qualifying IP assets in the business purchased. 

To claim the relief, businesses must complete a company tax return and include the relief. This will reduce both the company's or organisation’s taxable profit and the amount of corporation tax it has to pay. 

Restrictions 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; and from a related party that has been subject to a previous restriction.

For more information visit HMRC website

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