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  • Product: ONESOURCE Corporate Tax

Intangible fixed assets (IFA)

These sheets are designed to analyze the intangible fixed asset amounts in the accounts for tax purposes. The
Intangible fixed assets note
 is created by developing the sheet from the
Insert sheet
 menu and automatically creates the
Additions analysis
, the
Disposals analysis
, and the
IFA movements
 sheets.
An
Intangible fixed asset summary
 sheet can be inserted for each trade that has intangible fixed assets. Additionally, you can add a
Non-trading intangible fixed assets summary
 sheet if a company holds any intangible fixed assets for non-trading purposes.
These sheets summarize the various intangible fixed asset allowances that may be claimed via the following sheets:
  • Allowable per accounts
  • 4% fixed rate allowance
  • 6.5% fixed rate allowance
  • Restricted relevant assets
  • Excluded assets

Completing the sheets

Intangible Fixed Assets Note
This sheet is similar to the
Tangible fixed assets note
 sheet. The sheet displays the more common intangible fixed assets types of
Computer software
 and
Goodwill
. Additional categories can also be added by selecting
Insert Line Item
 from the
Insert
 menu. You will need to enter the information manually into the
Cost or valuation
 and
Amortisation
 sections.
The additions and disposals totals need to reconcile with the amounts on the
Additions analysis
 and
Disposals analysis
 sheets.
Additions Analysis
The sheet provides a single point of entry for all intangible fixed asset expenditures. It lets you insert rows as required. Use this sheet to analyse the additions entered on the
Intangible fixed assets note
 sheet. After completing the sheet, you need to insert the
Intangible fixed assets summary
 (trading or non-trading) sheet. Any non-trading additions should be designated as such by using the selector in the
Non-trading IFA
 column. You can split values between asset categories listed in the different columns.
Disposals Analysis
On this sheet, classify your disposals using the
IFA type
 dropdown list. You can insert rows as required. Amounts analyzed elsewhere in the calculation as profit or loss on disposal are automatically included in the
Reconciliation
 section.
IFA Movements
This sheet is completed automatically and summarizes the intangible fixed asset additions and disposals within the company.
Intangible Fixed Assets Summary and Non-Trading Intangible Fixed Assets
These sheets summarize the intangible fixed asset movements and the taxable or deductible amounts within an individual trade or business. Amounts can be manually entered or automated from the following IFA analysis sheets:
  • Allowable per accounts
  • 4% fixed rate allowance
  • 6.5% fixed rate allowance
  • Restricted relevant assets
  • Excluded assets
Enter the individual movements per the accounts of each asset as well as the brought forward tax written down value and tax cost for existing assets.
The system will insert rows from the
Additions analysis
 sheet, but you can change this by deselecting
Insert asset additions into capital allowance and IFA sheets?
 on the
Permanent information
 sheet. If this is deselected, you need to ensure that any additions are brought into the
Additions
 columns in the NBV section and the tax cost section.
Where an asset is subject to a full disposal in the period, the TWDV and tax cost will be adjusted automatically. However, if the asset is subject to partial disposal, you need to enter the corresponding reduction in TWDV and tax cost manually. If there is more than 1 accounting period, you also need to enter a date in the
Date of disposal / transfer
 column.
If the disposal results in a taxable gain, you can enter the gain reinvested to calculate the gain after reinvestment relief. If reinvestment relief reduces the tax cost of another asset, it can be manually entered also.
Allowable per accounts
Use this sheet for intangible fixed assets where the amortisation or impairment recognised in the accounts is relieved on an accounting basis under s729 CTA 2009.
The application calculates the tax-allowable debit by adjusting the amortisation or impairment charged in the accounts, using the ratio of the asset's tax written down value (TWDV) to its net book value (NBV), as required by s729(5) CTA 2009. The TWDV and NBV used in this ratio are the values immediately before the amortisation charge is made, that is, after any additions capitalised in the period and not the brought forward values alone. The TWDV is determined in accordance with s742 CTA 2009.
Where the TWDV equals the NBV, the allowable debit will equal the amortisation charged in the accounts. Where the TWDV differs from the NBV, the allowable debit will differ accordingly from the accounting amortisation. The TWDV will differ from the NBV where the tax cost of the asset has diverged from its accounting cost.
This commonly arises where:
  • the asset was acquired by a tax-neutral intra-group transfer and brought forward at the transferor's TWDV under s775 CTA 2009
  • a roll-over or reinvestment relief claim has reduced the tax cost under Chapter 7 Part 8 CTA 2009
  • the tax cost has been adjusted under the transfer pricing rules in Part 4 TIOPA 2010
  • an adjustment has arisen on a change of accounting policy under Chapter 15 Part 8 CTA 2009
The brought forward tax cost and TWDV are entered to reflect the tax history of the asset. They're not derived from the accounting figures. If the difference between the TWDV and the NBV isn't expected for an asset, review the brought forward values entered on the
Intangible fixed assets summary
sheet.
For example, where the accounting amortisation is £100,000, and immediately before the charge, the NBV is £500,000 and the TWDV is £400,000, the allowable debit will be calculated as £80,000.
In the same bullet point and after the sentence,
For assets to which s879B applies, like certain relevant assets acquired or created on or after 1 April 2019, use the 6.5% fixed rate allowance sheet
, add the following: If part of the acquisition cost of the asset is subject to a restriction due to the operation of s879M-879O, only the allowable amount of the asset should be entered on the
6.5% fixed rate allowance
 sheet, and the disallowed excess should be entered on the
Restricted relevant assets
 sheet.
Relevant assets
Chapter 15A Part 8 CTA 2009 deals with the tax treatment of relevant assets. The tax treatment of a particular relevant asset will depend on a number of factors, including the type of asset and when the asset was created or acquired. The IFA analysis sheet that should be used for these assets is as follows:
  • For assets to which s879B applies, like certain relevant assets acquired or created on or after 1 April 2019, use the
    6.5% fixed rate allowance
     sheet.
  • For assets to which one of the restrictions in s879C onwards applies, like certain relevant assets created or acquired during the period 8 July 2015 to 31 March 2019, use the
    Restricted relevant assets
     sheet.
  • For relevant assets defined under s879A that don't meet either of the earlier criteria, use one of the other IFA analysis sheets that matches the asset's tax treatment. For example, pre-2002 goodwill is excluded from the IFA regime and so the
    Excluded assets
    sheet should be used. Similarly, for relevant assets acquired before 8 July 2015 where the amortization in the income statement is allowable, use the
    Allowable per accounts
    sheet.
Excluded assets
Chapter 10 Part 8 CTA 2009 deals with assets that are excluded from the IFA regime. The general rule for excluded assets is that no IFA debits or credits will arise on amortization or realization. However, there are 2 types of assets that are only excluded from the IFA rules to the extent specified in the legislation:
  • Expenditure on research and development that falls under s814.
  • Software, in respect of which an election under s815 has been made.
When assets are entered into the
Excluded assets
 sheet, you should ensure that the correct option is selected from the
Excluded asset category
 dropdown to ensure that the tax treatment applies to the correct asset.
Change in basis adjustments
If you enter a change in basis adjustment in the NBV section on the Allowable per accounts or Restricted relevant assets sheets, a validation will appear in the change in basis column in the TWDV section, reminding you to manually enter the change in basis adjustment for tax purposes. The calculation of this adjustment should be done according to the legislation, ensuring that the maximum charge is equal to previous allowable debits (being the total amount of debits already allowed less the total of credits that have been brought into account).
note
For periods prior to FY2026, the change in basis adjustment for tax purposes is calculated automatically, but you will need to edit the formula if you need to restrict the change in basis adjustment figure to the previous allowable debits.

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