A company that sells goodwill, a trade mark, a patent or another intangible fixed asset at a profit can defer part of the taxable credit by reinvesting in new intangible fixed assets from 12 months before to 3 years after the sale. The relief, in Chapter 7 of Part 8 of the Corporation Tax Act 2009, reduces both the sale proceeds and the tax cost of the new assets, but it can never shelter the part of the credit that simply claws back earlier amortisation deductions.
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What does reinvestment relief do?
Under the corporate intangibles regime, selling a chargeable intangible asset produces a taxable credit equal to the proceeds less the asset’s tax written down value. Reinvestment relief, which HMRC describes at CIRD20010 as a form of rollover relief, lets the company defer some or all of that credit. It works by deducting the same amount from the realisation proceeds and from the company’s expenditure on the new assets (section 758). The tax is not forgiven: lower cost on the new assets means smaller amortisation deductions later and a bigger credit when they are sold.
The relief is for companies within Part 8 only. For individuals and for assets outside the intangibles regime, the capital gains version applies; see rollover relief on business assets. For the regime itself see intangible assets: the corporation tax regime.
Which conditions must the asset sold meet?
Section 755 sets two conditions for the old asset:
- Chargeable throughout. It must have been a chargeable intangible asset of the company throughout the period it held it. If it was chargeable when sold and for a substantial part, but not all, of the period, a just and reasonable proportion is treated as a separate asset that qualifies (section 755(5) to (7), CIRD20035).
- Proceeds above cost. The net proceeds must exceed the asset’s cost, meaning total capitalised expenditure recognised for tax purposes before any deductions for amortisation or impairment (CIRD20060). Internally generated goodwill with no tax cost always passes.
Two exclusions apply. A part realisation where the buyer is a related party cannot qualify (section 850, CIRD20080), and deemed realisations, such as those on certain degrouping events, are generally outside the relief except where sections 791 and 794 provide otherwise (section 763).
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What must the company reinvest in, and by when?
Under section 756 the new expenditure must:
- be incurred in the period from 12 months before to 3 years after the date the old asset is realised, unless HMRC agrees to extend either end;
- be capitalised for accounting purposes, not written off as incurred; and
- be on assets that are chargeable intangible assets of the company immediately after the expenditure is incurred.
Dates follow the accounts, not contracts. The old asset is realised when it stops being recognised in the accounts, and the new expenditure is incurred when it is recognised for accounting purposes (section 756(4), CIRD20110). HMRC notes at CIRD20025 that the new assets do not have to be used in a trade, that the proceeds do not have to be traced to the new spending, and that reinvesting in tangible assets such as property or plant does not qualify.
How much of the credit can be deferred?
Section 758 gives the amount available for relief:
| Reinvestment | Amount available for relief |
|---|---|
| New expenditure equals or exceeds the proceeds of the old asset | Proceeds less the cost of the old asset |
| New expenditure is less than the proceeds | New expenditure less the cost of the old asset (nil if that is negative) |
Because the formula always starts from cost, the part of the credit representing earlier amortisation or impairment deductions stays taxable whatever the company reinvests. Partial reinvestment cuts the relief pound for pound. For how those earlier deductions arise, see tax relief for goodwill amortisation.
How does the calculation work?
Illustration only. Alpha Ltd bought a trade mark in 2020 for £400,000 and has claimed £100,000 of amortisation deductions, leaving a tax written down value of £300,000. In June 2026 it sells the trade mark for net proceeds of £700,000. The taxable credit before relief is £400,000, of which £100,000 recovers earlier deductions and £300,000 is the excess over cost.
| New intangibles bought within the window | Relief | Credit still taxable | Tax cost of new assets |
|---|---|---|---|
| £750,000 | £700,000 less £400,000 = £300,000 | £100,000 | £450,000 |
| £550,000 | £550,000 less £400,000 = £150,000 | £250,000 | £400,000 |
| £350,000 | Nil, as spending is below cost | £400,000 | £350,000 |
In the first two rows Alpha Ltd’s future deductions on the new assets are calculated on the reduced cost, which is how the deferred credit comes back into charge over time.
How is the relief claimed, and what if the reinvestment has not happened yet?
Section 757 requires the claim to specify the old assets, the amount of relief claimed for each, and the new expenditure relied on. Otherwise the general corporation tax claim rules in Part 7 of Schedule 18 to the Finance Act 1998 apply, including the four year time limit in paragraph 55 (CIRD20150).
If the company intends to reinvest but has not yet done so when it files, section 761 lets it make a declaration of provisional entitlement in the return for the accounting period of the sale. While the declaration stands, the relief is given as if the conditions were met. It ends when withdrawn, when replaced by an actual claim, or 4 years after the end of the accounting period of the sale. If it lapses without reinvestment, HMRC makes the adjustments by assessment, despite normal time limits. The procedure mirrors the capital gains one described in provisional rollover relief claims.
Does it work across a group?
Yes. Section 777 treats two group companies as the same person if one realises the old asset, the other incurs the new expenditure while in the same group, the new assets are chargeable intangible assets of the buyer, and both companies claim. The relief is not available where the new assets are bought from another group member on a tax neutral transfer.
Buying shares can also count. Under sections 778 and 779, if a company acquires a controlling interest in another company that holds intangible fixed assets, the price is treated as spent on those underlying assets, up to the lower of their tax written down value and the consideration. The claim is made jointly, and the relief reduces the tax written down value of the underlying assets in the target’s hands. HMRC’s guidance on groups starts at CIRD20400.
What about older assets and capital gains?
Goodwill and other intangibles that a company held before the regime started are outside Part 8 and taxed under the capital gains rules. CIRD20050 explains that a capital gain on disposing of such an existing asset on or after 1 April 2002 can also be deferred by reinvesting in assets within Part 8, with the proceeds and cost tests adapted. In the other direction, capital gains rollover relief is no longer available where the replacement asset is a chargeable intangible asset (CIRD20010).
Which mistakes should companies avoid?
- Claiming relief on the whole credit, including recovered amortisation.
- Counting spending on property, plant or other tangible assets as reinvestment.
- Using contract dates rather than the dates the old asset leaves and the new asset enters the accounts.
- Expensing the new spending in the accounts, which fails the capitalisation condition.
- Forgetting that a group claim needs both companies to claim.
- Letting a provisional declaration run to its 4 year end without tracking whether qualifying reinvestment has happened.
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Related Accountapedia entries
- Intangible assets: IAS 38 vs FRS 102
- Rollover relief into depreciating assets
- SEIS reinvestment relief on capital gains
- FRS 102 Section 18: intangible assets
- Intangible assets: the corporation tax regime
Sources
- legislation.gov.uk: Act 2009 c. 4, section 754
- legislation.gov.uk: Act 2009 c. 4, section 755
- legislation.gov.uk: Act 2009 c. 4, section 756
- legislation.gov.uk: Act 2009 c. 4, section 757
- legislation.gov.uk: Act 2009 c. 4, section 758
- legislation.gov.uk: Act 2009 c. 4, section 761
- legislation.gov.uk: Act 2009 c. 4, section 763
- legislation.gov.uk: Act 2009 c. 4, section 777
- legislation.gov.uk: Act 2009 c. 4, section 779
- GOV.UK: Manual page CIRD20010
Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.