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Summer Budget 2015: restriction on tax deductibility of purchased goodwill

A change to the rules on reporting purchased goodwill and customer-related intangible assets, removing tax relief with immediate effect, could slow down the rate of mergers and acquisitions (M&A) transactions, while raising £1.2bn for the Exchequer over the next five years

In the Budget, the Chancellor announced the removal of corporation tax (CT) relief for companies who write off the cost of purchased goodwill and certain customer related intangible assets, typically on the acquisition of a business.

The new rules will apply to all acquisitions made on or after 8 July 2015 unless made pursuant to an unconditional obligation entered into before that date. It also applies to all goodwill created on or after that date.

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