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Tax relief on Goodwill

Client acquired a third part business and paid for goodwill in the accounting period. I am aware the rules were changed a few years ago and any non-related party goodwill acquired after 5 April 2002 (I think) and full tax relief is available.

Is the tax relief claimed fully in year on purchase or spread over the period in which it is amortised in the accounts?
Thank you in advance.


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Thankyou all for your help.
Yes it was acquired by a limited company. Sorry I did not mention this in my question.

I will amortise it for x number of years and claim tax relief over the period of amortisation.

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Acquired goodwill

I think your client has to be a limited company for tax relief to be available. Perhaps someone will confirm.

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1 April 2002
This is the key date. If you bought from a third party after 1 April 2002, it doesn't matter when the goodwill was created by the third party. You are allowed the amortisation for tax. If it is impaired to zero on acquisition the write off is tax allowable. However, HMRC will ask you to prove that it became worthless. A 5 year write off is unlikley to be questioned.

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Amortisation period
The amortisation is an allowable expense so it may be beneficial to reduce the EUL. Be careful though, i think the 2002 date means allowable if the goodwill was 'created' before then - so if the business started in say 2000, and the goodwill was sold in 2003, I dont think it is allowable.

If anyone could elaborate on this I would be grateful.

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