CIRD10150 - Intangible assets: introduction: royalties from new or existing assets

For the purposes of FA02/SCH29, a royalty means simply a royalty in respect of the enjoyment or exercise of rights that constitute an intangible fixed asset as defined in Schedule 29. Royalties satisfying this definition are within Schedule 29.

Royalties are by their nature revenue matters under the general tax code. Therefore, compared with the existing treatment, the ‘follow the accounts’ rule in Schedule 29 would, at most, change the time when they are brought to account for corporation tax. The limited nature of the change of treatment enables royalties, paid or received, to be brought within the new regime even though they are in respect of ‘existing’ (grand-fathered) intangible assets or certain types of asset that are otherwise excluded from Schedule 29 (for example master versions of films).

Schedule 29 applies to royalties recognised in the accounts on or after the commencement date (1 April 2002) but there are transitional provisions to ensure that on the introduction of the new regime royalties are taxed or allowed once and only once. Royalties are dealt with at CIRD11700 onwards.