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10.3. IP Amortization and Royalty Service Charge Deductions

Any intangibles purchased from an unrelated party, or intangibles brought into existence on or after 1 April 2002, that were purchased from a non-UK related party can be written down for tax purposes. The amount qualifying for a tax deduction generally corresponds to the accounting write-down, although a 4% straight-line amortization also is available.

Further, arm’s-length payments to connected parties for the use of IP (that is, royalties) or the provision of services, or payments under operating agreements generally are deductible

in the United Kingdom, provided the support the payment.