Background Note
30.This measure supports the government’s objective to have a fair tax system for all.
31.Under Part 8 Corporation Tax Act 2009 (CTA 2009) companies obtain corporation tax relief when expenditure on goodwill and intangible assets are recognised in the accounts. The current rules allow relief to be claimed even when there is continuing economic ownership.
32.Section 26 amends Part 8 CTA 2009 to restrict the relief available in respect of internally-generated goodwill and customer related intangible assets, where the relevant asset is acquired by a company from related party individual.
33.These amendments will make it fairer to businesses that do not have access to these reliefs. In particular:
small businesses that do not incorporate their business and are therefore currently at a disadvantage compared to those who do; and
start-up businesses that have always been operated within a company and who cannot access the relief for internally-generated goodwill, are currently at a disadvantage when compared to those that incorporate their business.
34.This section has effect on or after 3 December 2014. It applies to all transactions and contracts entered into on or after 3 December 2014 and pursuant to contracts entered into and not completed before 3 December 2014.
