Taxes Consolidation Act 1997 section 291A

Intangible assets

Section 291A provides a scheme of capital allowances for companies that incur capital expenditure on specified intangible assets for the purposes of a trade, treating such assets as plant and machinery and applying restrictions to ensure relief is targeted and proportionate.

• Companies that incur capital expenditure on a broad range of intangible assets (such as patents, trademarks, copyrights, software, know-how, goodwill and authorisations) for trade purposes can claim capital allowances; the allowance is based either on the accounting amortisation charged to the profit and loss account or, at the company's election, a fixed annual rate of 7% over 15 years.
• Activities involving the management, development or exploitation of these assets are ring-fenced as a separate "relevant trade", so allowances can only be offset against income from that trade; for expenditure incurred on or after 11 October 2017, total allowances (including balancing allowances) and related interest cannot exceed 80% of the relevant trading income, with any excess carried forward.
• No allowance is available where the expenditure already qualifies for relief under another provision, exceeds an arm's length price, or is not incurred wholly and exclusively for bona fide commercial purposes; Revenue may consult an external expert to verify the expenditure or the arm's length value of the asset.
• Where intangible assets transfer within a corporate group or under a reconstruction, allowances are generally denied if CGT relief applies, but the companies may jointly elect to forgo CGT relief so the acquiring company can claim capital allowances instead; all claims must be made within 12 months of the end of the accounting period in which the expenditure is incurred.

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