Selling intangible assets: corporation tax on realisation credits and debits
Short version. A qualifying company intangible asset realisation is dealt with under CTA 2009 Part 8. The accounting profit or loss and the taxable credit or allowable debit can differ. Work out the tax amount and its trade, property or non-trading route before completing the CT600.
How the accounts and tax figures differ
A software licence, copyright, patent or similar intangible asset can be realised by sale or another disposal. The proceeds alone are not the taxable credit. The accounts result can differ from the Part 8 result because the tax carrying value and applicable adjustments may differ. A Corporation Tax computation separates the book profit or loss from the taxable credit or allowable debit.
A trade realisation amount adjusts trading profit. A property-business amount adjusts that business's automatic tax result. Net non-trading credits are taxable as miscellaneous income and appear in CT600 box 195. Net non-trading debits can produce a loss arising in box 830. A section 753 claim against profits appears in box 265. The current loss and a brought-forward loss have separate claim controls.
Worked example
A company's prepared accounts show a £1,000 profit on selling a software licence used in its trade. Its prepared Part 8 working shows a £700 taxable realisation credit. The tax computation removes the £1,000 book profit from trading profit and adds the £700 tax credit. Box 640 is ticked for the realisation. The £700 is an example of a customer-prepared tax result, not a calculation from the sale proceeds alone.
Check the CT600 and computation
HMRC asks for box 640 when an intangible asset has been sold or written down, including when no amortisation or impairment deduction is claimed. The box is an indicator, not a tax calculation. Compare the draft CT600 with the prepared working and check both short returns if the accounts cover more than twelve months. Follow the step-by-step entry guide for the exact fields.
This is general guidance, not a determination that an asset qualifies for Part 8 or that a particular debit is allowable. Check the asset history and seek professional advice if the treatment is uncertain.