How to reflect Goodwill relief on the Corporation Tax Return?

HMRC have recently amended the rules (01/04/2019) on instances where profit can be reduced by claiming corporation tax relief on goodwill and relevant assets. We would recommend reading the HMRC guidance further on this particular topic to ensure you understand this fully before any entries are made. 

The guidance issued is not specific about where to enter the relief. Unfortunately our Capital Allowances section is not suitable (as this only caters for Fixed Assets and wouldn't cater for the relief at 6.5% ‘straight line’). We therefore believe the below entries would be the most suitable in order to reflect the changes in profits chargeable to corporation tax.

HMRC Forms mode: 

CT600 Core > Computations > Tax adjusted profit/loss - other adjustments

SimpleStep mode:

CT600 Core > Trade and professional income > Tax adjusted profit/loss - other adjustments

You will see a box labelled Miscellaneous Other Deduction which can be used.

Note: if you want the relief to be itemised, you should use the wizard icon which will enable you to input a description. This description will also appear on the computations for further analysis.

The below images should further illustrate this for your convenience.

In addition to the above, you should make an entry in Box 640.

HMRC Forms mode:

CT600 Core > Core > Page 7 > tick box 640 has written down or sold intangible assets

SimpleStep mode:

Indicators and information > tick the box for has written down or sold intangible assets

Please note; If the goodwill is sold at a loss, there is a further restriction which would mean that the loss cannot be set against trading profits in the year of sale. It can only be utilised against non-trade income, such as rental profits or interest received.