Corporation Tax Act 2009 section 877

Election for fixed-rate writing down in relation to resulting asset

Section 877 allows a company to elect for fixed-rate writing down of intangible fixed assets that have been split into two or more separate assets following a change of accounting policy.

• Where a change of accounting policy causes a single intangible fixed asset to be reclassified as two or more separate assets, the company may elect for fixed-rate writing down on any of those resulting assets, provided no such election was made (or is later made) for the original undivided asset.
• The election must be made within the same time limit that would have applied had the election been made in respect of the original undivided asset.
• If the election is made, the original asset is treated as though it had always consisted of the same number of separate notional assets as there are resulting assets, with each notional asset matched to one resulting asset, and the appropriate proportion of all amounts relating to the original asset is attributed to each notional asset.
• The appropriate proportion for each resulting asset is calculated by dividing the accounting value of that resulting asset at the beginning of the later period by the total accounting values of all resulting assets at the beginning of that period.