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Changes to the intangible fixed assets regime

Andy Tall of Greenback Alan LLP examines the Spring Budget 2020 changes to the intangible fixed assets regime, setting out some detailed examples to effectively illustrate his points.

Intangibles Prior to the Spring Budget, intangible fixed assets (IFA) were already subject to four sets of tax rules depending on when they were acquired (see TAXguide 19/20). The IFA regime is facing yet another adjustment with the inclusion of relief for certain deductions in respect of pre-1 April 2002 (pre-02) IFA acquired from related parties.

Historically, such assets remained within the pre-02 regime (ie, taxed as a capital asset). For acquisitions on or after 1 July 2020 the element of the IFA that arose after 1 July 2020 will be within scope of the intangible fixed assets regime (Pt 8, CTA 2009), with the exception of IFA which were already in the scope of corporation tax (CT) where the tax treatment will be grandfathered. Anti-avoidance is in place to prevent taxpayers from circumventing the grandfathering.