If you buy the goodwill of a business you will often be able to claim corporation tax relief on the amount of the purchase price which is amortised in the accounts.

The question then is at what rate can goodwill be amortised? There are new developments on this. In the USA there is a statutory deduction of 20% per annum over 5 years, but it is now understood that ordinarily HMRC will accept amortisation over 3 years, based on 1/3rd of the cost being claimed each year.

A new FRS 102 may be adopted for accounting periods beginning on or after 1 January 2015, but with the right to apply it earlier to accounting periods ending on or after 31 December 2012. FRS 102 requires amortisation over the expected useful economic life, but if the entity is unable to make a reliable estimate of what the useful life is, it must not exceed 5 years. Accordingly, amortising over 3 years may still be acceptable.