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FA19/S25

Background to the FA19 changes

»Ê¹ÚÌåÓýapp Government announced in the 2017 Budget that it would consult on reforming the intangible fixed asset regime and in the 2018 Budget that it was introducing a targeted relief for relevant assets from April 2019. »Ê¹ÚÌåÓýapp FA19 policy focuses on relevant assets acquired on the acquisition of a business with qualifying intellectual property (IP).

»Ê¹ÚÌåÓýapp main policy design elements for allowing debit relief in respect of goodwill and relevant assets are:

• Relief for the cost of post-FA 2019 relevant assets is given at a fixed rate of 6.5% per annum under CTA09/PART8/CHAPTER3 under the same mechanism that applies to fixed rate elections under CTA09/S730.
• For acquisitions, relief is limited to a maximum of 6 times the cost of any qualifying IP acquired with the business. Where the cost of the relevant assets acquired is less than 6 times the cost of qualifying IP no restriction is applied.
• No amortisation or fixed rate debit relief under Chapter 3 and no debits allowed under Chapter 15 where relevant assets are not acquired with qualifying IP, or not acquired with a business.
• A restriction in relation to post-FA 2019 relevant assets for related party incorporations similar to that previously provided by CTA09/S849B.
• Where relief is not provided under Chapters 3 or 15 relief will be provided under Chapter 4 on a realisation (see CIRD44092 onwards).
• »Ê¹ÚÌåÓýapp effect of the CTA09/S816A restrictions is preserved for relevant chargeable intangible assets acquired or created between 8 July 2015 and 31 March 2019.

See CIRD44060 for a list of the qualifying IP and for the definition of “relevant assets�.

Points to note

»Ê¹ÚÌåÓýapp FA19 rules only apply to relevant assets acquired or created on or after 1 April 2019. For acquisitions of relevant assets before 1 April 2019 the following rules will apply:

• For acquisitions that took place before 3 December 2014 amortisation etc. relief continues to be available after 3 December 2014
• Related party acquisitions from individuals and firms, including related party incorporations of related party businesses will not be entitled to amortisation etc. relief for relevant assets transferred between 3 December 2014 and 7 July 2015.
• Acquisitions that took place between 8 July 2015 and 31 March 2019, will not be entitled to amortisation etc. relief in respect of relevant assets, including acquisitions from non-related parties

Tax-neutral transfers of assets subject to these earlier rules that occur on or after 1 April 2019 will not change the treatment of those assets. »Ê¹ÚÌåÓýappy will continue to be subject to the rules and restrictions that applied to them before the tax neutral transfer.

»Ê¹ÚÌåÓýapp new rules do not affect relief for acquisitions of other types of intangible fixed assets that are not relevant assets.