Goodwill amortisation: change to tax reporting requirements

Changes to corporate tax relief add a significant layer of complexity to goodwill and intangibles following the announcement in the Summer Budget which outlawed a long-accepted tax accounting practice. Peter Rayney considers how to mitigate the tax bill in light of the new rules

Perhaps the biggest surprise that sprung from the Chancellor’s Summer Budget box was the abolition of tax relief for the amortisation of goodwill and customer-related intangible assets.

Under UK GAAP, companies are usually required to amortise the cost of goodwill acquired over its useful economic life. It has always been a fundamental tax principle that accounting depreciation is not allowed as a deduction against profits.

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