Intangible Fixed Assets

Question 1

How are the disposals of Intangible Fixed Assets treated pre & post April 2002

Answer 1

Any IFAs which have been acquired before April 2002 will be treated as chargeable gains under capital gains taxes

Any IFAs post April 2002 will be treated as Non-trade IFAs Debits/Credits

Question 2

What are the amortisation options available for Intangible Fixed Assets

Answer 2

We need to be mindful that in any situation is it a choice between the accounting or a fixed rate.

The accounting rate is just the amortisation over the life of the asset e.g. £100k IFA for 10 years is £10k

Acquired Pre 01 April 2002 - charged under CGT

Acquired between 01 April 2002 & 7 July 2015 - 4% deductions

Acquired between 08 July 2015 & 31 March 2019 - no deductions

Acquired post April 1st 2019 - 6.5% on qualifying IP being:
- Patents
- Registered Designs
- Copyright

Question 3

How do we treat rollover relief in respect of intangible fixed assets (IFAs) - and what are some of the conditions

Answer 3

Conditions - These conditions are similar to capital gains in that these can be rollover over of:

• Any asset which was acquired up to 12 months before and 36 months after the sale of the original asset
• It also does not need to be the same type of asset that it is rolled over to.

FIRST THING TO CONSIDER:
in any instance, the first thing we need to do is to actually calculate the chargeable gain that has arisen: and this is done by taking the PROCEEDS and deducting the AMORTISED COSTS

following this we can determine any rollover relief available:

Full Proceeds Reinvested:

In this case, the amount of rollover relief that can be deducted will calculated as: Proceeds on disposal - original base cost of asset

Part Proceeds Reinvested:

In this case, the amount of rollover relief that we can deduct will be: The cost of new asset purchased - cost of original asset purchased

Question 4

What do we need to consider if roll over relief has been claimed on an IFA purchase

Answer 4

This will reduce the base cost of the asset which will also impact the amount of amortisation which can be claimed on it