It was quite a surprise when amortisation relief was stopped for all purchased goodwill from 8 July 2015 (which was the date of the 2015 Summer Budget). This significantly reduced the attractiveness of trade and asset sales to purchasers because they would no longer face the prospect of an annual corporation tax deduction in respect of goodwill write-downs. This legislation applied to ‘relevant assets’ which were defined as goodwill and other similar business related intangible assets such as:
Therefore, on a positive note, companies can still benefit from amortisation relief in respect of many types of intellectual property e.g. patents, registered trademarks or designs, copyrights and know how. It is only unregistered trademarks and related licenses which are excluded.
Where a business has valuable intellectual property then this will increase the attractiveness of a trade and asset purchase to a buyer and it would be worth clearly setting out the price of such assets in the sale and purchase agreement. Furthermore, all other things being equal, this would be an extra reason for a company to register any intellectual property as part of its pre-sale planning.
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