What are fungible assets under Corporation Tax Act 2009 section 858?

Under section 858, fungible assets are intangible fixed assets where individual units cannot be distinguished from one another. A practical example is milk quota in the dairy farming industry, where one unit is identical to any other unit and there is no way to tell them apart for tax purposes.

How does the single asset rule work for fungible intangible fixed assets?

Where a company holds multiple fungible assets of the same kind, all such assets are treated as a single combined asset for corporation tax purposes. This pooling approach removes the need to track each individual unit's acquisition cost and timing separately, simplifying the company's tax accounting considerably.

How are disposals of fungible assets handled under section 858?

When part of a fungible asset holding is disposed of, the disposal is treated as a part-disposal of the single pooled asset. The company does not need to identify which specific units were sold or match specific acquisitions with specific disposals, reflecting the interchangeable nature of the assets.

Can you give an example of fungible asset pooling for corporation tax?

A dairy company acquires 500 litres of milk quota for £5,000 and later 300 litres for £3,600. The total 800 litres costing £8,600 is treated as one intangible fixed asset. If 200 litres are later sold, the disposal is a part-disposal of the single pooled asset without identifying specific acquisitions.

Corporation Tax Act 2009 section 858

Fungible assets

Section 858 establishes a "single asset" rule for intangible fixed assets that are fungible — meaning assets that are interchangeable and identical in nature.

Fungible assets are defined as assets of a kind where individual units cannot be distinguished from one another — for example, milk quota in the dairy farming industry.
Where a company holds more than one fungible asset of the same kind, all such assets are treated as a single asset for corporation tax purposes.
This single asset treatment simplifies the tax accounting for intangible assets that are identical and interchangeable, removing the need to track each individual unit separately.
The rule applies regardless of when or how the individual fungible assets were acquired, pooling them together as one combined asset.

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