Intangible Fixed Assets

Question 1

What is an Intangible fixed asset and what are the different types we can have

Answer 1

This is any asset that has been acquired or created by a company for use in the business

These can be made up of:
- intellectual property (patents/trademarks etc)
- goodwill

Question 2

What is the general deduction is available for intangible fixed assets (effectively not for goodwill)

Answer 2

Companies are able to receive a deduction as they are charged in the accounts (i.e a £200,000 patent for a 10 year period would be £20,000 pa) or the could elect to have a straight line deduction of 4%

Question 3

What tax deduction is available in respect of goodwill

Answer 3

In general, no relief is available for goodwill. However, if goodwill is acquired as part of the acquisition of a business (post April 2019) then relief is available on:

• patents
• registered designs
• copyright

This relief would be at 6.5%pa

Question 4

How do we calculate the rollover for proceeds in respect of IFAs

Answer 4

Proceeds on disposal of old asset - costs of original asset = rollover relief

Question 5

What do we need to consider if we have been told that we have developed a software system which is in the accounts

Answer 5

We would want to know if this item was treated as revenue or capital - if it was capital then amortisation would be allowable at 4% or over the life of the asset.