Is amortisation of intangible assets tax deductible for a limited company?
Short version. Amortisation of an intangible asset can be deductible for Corporation Tax under Part 8 CTA 2009. It depends on the asset and the applicable rules. An accounting charge does not by itself establish tax relief.
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1. Why intangible amortisation can differ from depreciation
Amortisation spreads an intangible asset's accounting cost over its useful life. Tangible-asset depreciation is generally added back in a tax computation, with qualifying expenditure considered separately for capital allowances. Within the corporate intangibles regime, an accounts-based debit can instead follow qualifying amortisation or impairment.
CTA 2009 section 729 provides the accounts-based mechanism. HMRC CIRD12755 explains that the accounts charge and tax debit match where its conditions hold, including the relevant accounting requirements and no difference between tax and accounting values. A fixed-rate election uses a different route.
2. What to establish in your tax working
Check whether the asset falls within Part 8, the acquisition and related-party rules, any goodwill or customer-related asset restrictions, and whether tax and accounting values differ. Purchased software, a licence or a customer list is not automatically deductible simply because of its name.
HMRC's corporate intangible assets guidance sets out these issues. Goodwill and relevant assets have their own restrictions. Do not use a general amortisation example as a calculation of goodwill relief.
3. What this means for a micro company
Preparing micro-entity accounts does not make an expense tax deductible. The accounts and tax computation answer different questions. The micro-entity profit and loss format has an item for depreciation and other amounts written off assets, as set out in Schedule 1, Section C. Your tax working identifies the qualifying deduction.
4. A tax computation example
Assume the prepared accounting charge is £5,000: £3,000 tangible depreciation and £2,000 qualifying accounts-based intangible amortisation. Adding back £5,000 and deducting £2,000 leaves a net £3,000 add-back, before any separate capital allowances or other adjustments. The example assumes the £2,000 deduction has already been established.
For trading assets, the deduction affects the tax-adjusted trading result. The CT600 reports trading profits in box 155. A trading loss is reported in the losses section rather than as a negative profit in box 155. See HMRC's CT600 guide. Keep the detailed reconciliation in the tax computation.
5. Entering prepared figures
SimpleCompanyTax provides one field for the supported accounts-based amortisation or impairment deduction. Follow the step-by-step entry guide. For a fall in asset value, read the licence impairment guide.
This is general guidance, not a decision about your company's entitlement. Check the linked official conditions or seek advice when preparing the tax treatment. Fixed-rate relief is outside this field's supported route. A sale or other realisation uses separate book and tax entries.