What useful life should be considered when estimating the TAB factor of an intangible asset?

Amortisation of intangible assets is not always tax deductible. Its deductibility depends on the corporate income tax legislation of single countries. Most countries define maximum amortisation rates or minimum number of years in which the amortisation of intangible assets can be deducted, if at all. This page displays the legal tax amortisation periods of the main types of intangible assets.

Summary Table

CountryPatentsTechnologyTrademarkCustomer relationships GoodwillLast update
United Kingdom25 or RUL25 or RUL25 or RULno TABno TABApr 2016

Further Detail and Source Legislation

Tax amortisation of intangibles in the UK is explained in the Corporate Intangibles Research & Development Manual[1] of the Her Majesty's Revenue and Customs department.

For every intangible asset, companies in the UK can decide[2] between:

  1. deducting the amount amortised in their accounts as long as their treatment is in accordance with GAAP,[3] or
  2. applying a fixed rate deduction of 4% regardless of its accounting treatment. This option might be of interest in case of assets that have a very long useful lifetime or are not amortised in the accounts.[4]

Goodwill is explicitly excluded[5] from the scope of the regulation and its amortisation is therefore considered not to be tax deductible.

For acquisition of goodwill and customer related intangible assets on or after 8 July 2015, tax deductions for amortisation, and certain other charges, have been abolished.

  1. ^ Corporate Intangibles Research & Development Manual of the Her Majesty's Revenue and Customs department.
  2. ^ CIRD 10115
  3. ^ CIRD 12755
  4. ^ CIRD 12905
  5. ^ CIRD 11070 (http://www.hmrc.gov.uk/manuals/cirdmanual/CIRD11070.htm)

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