Taxation (UK) · The use of exemptions and reliefs in deferring and minimising corporation tax liabilities

Intangible Assets, R&D and Other Company Reliefs for Corporation Tax

Updated 11 October 2026 · Fact-checked

These are company reliefs that cut or defer corporation tax. The core skill is loan relationships: net non-trading debits and credits, then relieve any deficit against total profits, carry it back, or carry it forward. Intangibles, R&D relief and patent box are wider topics. Check the syllabus before relying on them.

Understand Intangible Assets, R&D and Other Company Reliefs

Companies pay corporation tax on taxable total profits. Reliefs reduce those profits, or move a deduction into a better period. The main topic here is loan relationships and how a deficit is relieved. The page also notes intangible fixed assets, R&D relief and the patent box.

Loan relationships arise when a company borrows or lends money. For a trading company, interest paid on borrowing for trade purposes is a trading expense. Interest on non-trading borrowing is a non-trading loan relationship debit. Interest received is a non-trading credit. Net non-trading credits are taxed. If debits exceed credits, you have a non-trading loan relationship deficit.

A non-trading deficit is relieved in a set order:

First, the company claims to set it against total profits of the same period. This is done before qualifying charitable donations.
Next, any unrelieved amount can be carried back by claim against non-trading profits of the previous 12 months.
Any amount still unrelieved is carried forward.

The carry back is not a free alternative. It only applies to the amount left after the claim against total profits of the same period. Because the deficit is set against profits before donations, the remaining profits may be too low to relieve the donations in full. The unrelieved donations are then wasted, so check the order in the question.

Intangible fixed assets (such as goodwill, patents and software), research and development (R&D) relief and the patent box are part of wider UK corporation tax study. This page cannot confirm that they are examinable in TX-UK, and the tax tables ACCA provides give no rates for R&D relief or the patent box. Check the current TX-UK syllabus and examinable documents before spending study time on them. If a question does mention them, use only the facts and figures it gives you.

Key rules to remember

Taxable total profits (TTP): TTP = chargeable profits − non-trading deficit claimed against total profits − qualifying charitable donations; Chargeable profits include trading profit, property income, non-trading loan relationship credits and chargeable gains. Deduct any deficit claimed against total profits (and other reliefs claimed, such as trading losses) first. Deduct qualifying charitable donations last.
Non-trading loan relationship result: Net credit (taxed) or deficit = non-trading credits − non-trading debits; A net credit is taxable. A deficit can be relieved against profits by claim or carried forward.
Corporation tax rates: Small profits rate 19%; main rate 25%; limits £50,000 and £250,000; These are the rates in the tax tables for financial years 2023 to 2025. Limits are divided by the number of associated companies and time-apportioned for short periods.
Marginal relief: (Upper limit − augmented profits) × 3/200 × TTP ÷ augmented profits; Applies when augmented profits fall between the lower and upper limits.

How to solve Intangible Assets, R&D and Other Company Reliefs questions

Work through the company's income in order and decide how each item is taxed before applying any relief.

1Identify the financial year or accounting period and the type of relief in the question.
2Classify each item: trading, property, non-trading loan relationship, or chargeable gain.
3Loan relationships: separate trade-related interest, which is a trading item, from non-trading debits and credits, then net the non-trading ones.
4If there is a deficit, first claim it against total profits of the same period. Then carry back any unrelieved amount by claim against non-trading profits of the previous 12 months, and carry forward the rest. Note whether each claim is made in full.
5Deduct qualifying charitable donations after the deficit claim to reach taxable total profits. Check that enough profits remain to relieve them, as they may be wasted.
6Compute tax at the rate for the period, and check for marginal relief and associated companies.
7If a question mentions intangibles, R&D relief or the patent box, use only the treatment and figures the question provides.

Quickest way: Net, classify, then relieve

When to use it: Use this in Section A or B objective questions where you must spot the correct treatment fast.

Ask: is this item trading, non-trading loan relationship, or a gain?
For interest, decide if the borrowing was for the trade.
Net non-trading debits and credits first. A positive result is taxed; a negative one is a deficit.
Remember relief against total profits is by claim, and the deficit is used before donations.
If intangibles, R&D or patent box is mentioned, use only the information and figures in the question.

Common mistakes in Intangible Assets, R&D and Other Company Reliefs

Treating trade-related interest as a non-trading debit.
Students see 'loan' and go straight to the non-trading rules.
Fix: Check the purpose of the borrowing. Interest on borrowing for trade purposes is deducted as a trading expense.
Taxing a net non-trading loan relationship credit as trading profit.
Interest received is mixed up with business income.
Fix: Show net non-trading credits on their own line within chargeable profits.
Deducting charitable donations before the deficit relief.
Students follow the format order loosely.
Fix: Apply the deficit claim against total profits first, then deduct qualifying charitable donations to reach taxable total profits. Note that the deficit claim may leave too little profit to relieve the donations, so they can be wasted.
Treating carry back against earlier non-trading profits as an alternative to a claim against total profits.
Students read the reliefs as a list of choices.
Fix: Claim against total profits of the same period first. Only the unrelieved amount can be carried back against non-trading profits of the previous 12 months, by claim. Carry forward what is left.
Forgetting to scale the £50,000 and £250,000 limits.
Focus on the relief leads students to skip the rate step.
Fix: Divide the limits by associated companies plus one, and time-apportion for a short period.
Inventing R&D or patent box percentages from memory.
Students recall rates from other sources.
Fix: Use only the rates stated in the question. The tax tables ACCA provides do not give them.

Worked examples

Example 1

Alpha Ltd has trading profit of £140,000, a non-trading loan relationship deficit of £25,000 for the year and no other income. It has no associated companies and makes a claim to set the deficit against total profits. Compute the corporation tax for the financial year 2025 (the year to 31 March 2026).

Show the solution

Use the financial year 2025 rates from the tax tables: main rate 25%, lower limit £50,000, upper limit £250,000 and standard fraction 3/200.
Trading profit is £140,000.
Deduct the deficit claimed against total profits: £140,000 − £25,000 = £115,000.
No donations, so taxable total profits are £115,000.
There are no dividends, so augmented profits are £115,000, between £50,000 and £250,000.
Tax at 25%: £115,000 × 25% = £28,750.
Marginal relief: (£250,000 − £115,000) × 3/200 × 115,000 ÷ 115,000 = £135,000 × 3/200 = £2,025.
Corporation tax = £28,750 − £2,025 = £26,725.

Answer: Corporation tax payable for the financial year 2025 is £26,725.

Example 2

Beta Ltd has trading profit of £60,000, bank interest received of £9,000 on a non-trading deposit, and interest paid of £4,000 on a loan used to buy shares in another company. It pays a qualifying charitable donation of £5,000. Find taxable total profits.

Show the solution

Non-trading credits are £9,000 and non-trading debits are £4,000.
Net non-trading credit = £9,000 − £4,000 = £5,000.
Chargeable profits = £60,000 + £5,000 = £65,000.
Deduct the qualifying charitable donation of £5,000.
Taxable total profits = £65,000 − £5,000 = £60,000.

Answer: Taxable total profits are £60,000.

Exam tips

Show the loan relationship netting as its own working so you earn method marks even if a figure is wrong.
In objective questions, look for the word 'trade' in the borrowing purpose to decide where interest goes.
State clearly when a loss or deficit relief is by claim.
Do not spend long on R&D relief or the patent box. If a question mentions them, use only the data it supplies.
Always finish with rate, marginal relief check and tax payable.

Practice questions from The use of exemptions and reliefs in deferring and minimising corporation tax liabilities

Intangible Assets, R&D and Other Company Reliefs in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Intangible Assets, R&D and Other Company Reliefs: frequently asked questions

What is a non-trading loan relationship deficit?

It arises when a company's non-trading interest costs exceed its non-trading interest income in a period. You first claim to set it against total profits of the same period. Any unrelieved amount can be carried back by claim against non-trading profits of the previous 12 months, and the rest is carried forward.

Are intangible assets examinable in TX-UK?

This page cannot confirm it. Check the current TX-UK syllabus and examinable documents. If a question does cover intangibles, follow the treatment the question describes.

Will I need R&D or patent box rates in the exam?

The tax tables ACCA provides for TX-UK do not list them, so any rate you need must come from the question. Check the syllabus before spending time on these reliefs, and apply only the data given.

Is loan interest always a non-trading item?

No. Interest on borrowing for trade purposes is a trading expense. Interest on other borrowing is a non-trading debit, so the purpose of the loan decides the treatment.