Corporation Tax Act 2009 section 744

Effect of part realisation of asset

Section 744 explains how to calculate the tax written-down value of an intangible fixed asset when only part of that asset has been realised (a part disposal or partial realisation).

• After a part realisation, the tax written-down value is reduced proportionately using the formula: WDVB × (AVA ÷ AVB), based on the ratio of the asset's accounting value after and before the part realisation
• Going forward, the tax written-down value is calculated using the normal rules (accounting basis or fixed-rate write-down), but the recognised cost is reset to the post-part-realisation written-down value plus any subsequent capitalised expenditure
• Only tax credits and debits arising after the part realisation are taken into account when determining the ongoing written-down value
• If there is a further part realisation the same proportionate reduction is applied again, and if there is a change of accounting policy the adjustment rules in Chapter 15 apply