Corporation Tax Act 2009 section 729

Writing down on accounting basis

Section 729 provides a tax deduction for the writing down of capitalised intangible fixed assets, based on the amounts charged to the profit and loss account through amortisation or impairment.

• When a company recognises an amortisation charge or impairment loss on a capitalised intangible fixed asset, a corresponding tax debit must be brought into account.
• In the period when expenditure is first capitalised, the tax debit is calculated as the accounting loss multiplied by the ratio of tax-recognised expenditure to total capitalised expenditure (L × E / CE).
• In subsequent periods, the tax debit is calculated as the accounting loss multiplied by the ratio of the asset's tax written-down value to its accounting value, both measured immediately before the charge (L × WDV / AV).
• This accounting-based write-down method does not apply where the company has elected to use the fixed-rate basis under section 730 instead.