Tax relief and goodwill

Source: HM Revenue & Customs | | 06/09/2017

Goodwill is usually defined as the ‘extra’ value attributable to a business over and above its tangible assets.

In the vast majority of cases, when a business is sold a significant proportion of the sale price will be for this type of intangible asset: the goodwill of the company. This places a monetary value on the business's reputation and customer relationships, or as HMRC says in their guidance, in accounting terms, purchased goodwill is the balancing figure between the purchase price of a business and the net value of the assets acquired. Valuing goodwill is complex and there are many different methods which can be used and that vary from industry to industry.

The tax treatment of goodwill has changed in recent years. Until July 2015, a company which bought goodwill and certain other customer related intangible assets could claim corporation tax relief for the payment. This was done by writing off the cost of the goodwill over a period of years, otherwise known as ‘amortising’ the goodwill.

Planning note:

From 8 July 2015, no corporation tax deduction is available for the cost of purchased goodwill.

If you are looking at purchasing or selling a business we would be happy to advise you on the issues relating to the acquisition or sale. We can also help you structure the deal to maximise any available tax reliefs still available.



Accountancy service

“Are you feeling confused about how to comply with HMRC’s accountancy requirements?

Read more...

Your business

Your business

Are you a Start-up business? Are you a little confused about the different types of companies? 

Read more...

Virtual Director

Virtual Director

Are you looking to grow your business? A Virtual Financial Director can help you take your business to the next level.

Read more...

Xero

XERO

Ensure that your business has the edge over your competitors and incorporate Xero into your business, today!

Read more...

Latest News

Tax gap lowered according to HMRC
21/06/2018 - More...
HMRC has published figures that show the tax gap for the 2016-17 tax year was

M&S lose expensive VAT case
21/06/2018 - More...
The First-Tier Tribunal recently heard an appeal that considered the correct VAT

Self-assessment second instalment due end of July
21/06/2018 - More...
Taxpayers that make payments on account should be aware that the second payment

Search News


Newsletter

With our newsletter, you automatically receive our latest news per e-mail and get access to the archive including advanced search options!

» Sign up for the newsletter
» Login