Intangible Assets and Tax Relief on Amortisation

Unlike tangible assets such as equipment and vehicles, intangible fixed assets are treated differently for corporation tax purposes. This guide explains when amortisation on intangible assets is tax-deductible and how to enter it correctly in TinyTax.

Tangible vs Intangible: Different Tax Rules

For tangible fixed assets (machinery, computers, vehicles), depreciation is disallowable for tax. Instead, you claim capital allowances (AIA or writing-down allowances) as your tax relief.

For qualifying intangible fixed assets (software, patents, trademarks, customer lists, know-how), the rules are different. Under the Corporate Intangibles Regime (CIR, Part 8 CTA 2009), the amortisation or impairment charge in your accounts is directly deductible for corporation tax — capital allowances do not apply.

Common Qualifying Intangibles

How to Enter Intangible Amortisation in TinyTax

TinyTax automatically adds all depreciation back in the tax computation, since the standard rule for tangible assets is that depreciation is disallowable. To claim the CIR deduction on qualifying intangibles, follow these steps:

Step 1 — Enter total depreciation in the P&L section

Include all depreciation and amortisation in the P&L field — both tangible and intangible — as it appears in your accounts.

Step 2 — Note the automatic add-back

In the Tax Computation section, you will see "Depreciation (disallowable for tax)" showing the full amount added back. This is correct for tangible assets.

Step 3 — Offset the intangible portion using Other Tax Adjustments

In the Tax Computation section, find the Other Tax Adjustments field. Enter the qualifying intangible amortisation as a negative number. This restores the CIR deduction that the automatic add-back has removed.

For example, if you amortised £3,000 on qualifying software and £2,000 on a vehicle:

• P&L Depreciation: £5,000 (total — added back automatically)
• Other Tax Adjustments: -£3,000 (to restore the CIR deduction on intangibles)
• Net taxable effect: £2,000 added back (the tangible portion only)

Capital allowances (AIA and writing-down allowances) apply to tangible assets only. Do not enter your intangible assets in the Annual Investment Allowance field — the negative Other Tax Adjustments entry is your tax relief.

Common Questions

Does this apply to micro-entities?

Yes. The Corporate Intangibles Regime applies regardless of company size or whether you file micro-entity accounts. The accounts format (micro-entity, small company, etc.) affects how you present your accounts, not the underlying tax treatment.

What if I am unsure whether my intangible qualifies?

If you are not certain whether an asset qualifies under the CIR, a qualified accountant can advise. Getting this wrong in either direction can affect your tax liability.

What about goodwill?

Goodwill is subject to restricted relief rules since April 2019. If your business acquired goodwill or customer-related intangibles as part of a business purchase, the deductible amount may be limited or nil. This is a complex area — professional advice is recommended.

Can I carry forward intangible losses?

Yes. If your CIR deduction creates or deepens a loss, those losses can generally be carried forward and offset against future profits from the same or a different trade. The rules are governed by Part 8 CTA 2009.