Corporation Tax Act 2009 section 731

Writing down at fixed rate: calculation

Section 731 sets out how to calculate the annual writing-down debit when a company has elected to use the fixed-rate basis for an intangible fixed asset.

• The annual debit is the lower of 4% of the asset's cost (as recognised for tax purposes) and the remaining tax written-down value, starting from the period the expenditure is incurred.
• If an accounting period is shorter than 12 months, the 4% figure must be reduced proportionately.
• The cost for tax purposes equals the amount capitalised in the accounts, subject to any transfer pricing or other adjustments required by the intangible assets rules or Part 4 of TIOPA 2010.
• Where part of the asset is disposed of (a part realisation), the cost figure used going forward is based on the value of the asset remaining after that disposal, plus any later capitalised expenditure on the asset.