IFA Regime

The measure

The government has announced a significant change to the scope of the intangible fixed asset (“IFA”) regime.

Intangibles that were created prior to 1 April 2002 and are acquired from a related party that is outside the charge to corporation tax on or after 1 July 2020, will now fall within the scope of the IFA regime. This means that tax relief will be available for expenditure on the acquisition of these assets.

The tax treatment of assets already within the charge to corporation tax will not be impacted by these changes.

Specific rules will also be introduced on acquisitions of intangibles from related parties that are not companies.


Who will be affected?

The changes will affect companies acquiring intangibles into the UK from related parties.


When will the measure come into effect?

The changes will have effect from 1 July 2020, with transitional provisions in force from 11 March 2020. 

Our view

This is a welcome change to the intangible fixed asset regime. It removes a barrier to inbound investment into the UK by aligning the regime more closely with those of other major economies, whilst also helping to simplify the rules.