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UK GAAP · FRS 102 · HMRC Intangibles · 2026

Goodwill Amortisation Calculator UK 2026

Calculate goodwill amortisation under UK GAAP, build a year-by-year carrying value schedule, compare impairment scenarios and estimate Corporation Tax relief using the current UK goodwill and relevant asset rules.

10 yrs
FRS 102 cap if useful life cannot be estimated
6.5%
Fixed tax relief rate for eligible relevant assets
19–25%
2026 Corporation Tax rates
SL
Common straight-line accounts method

Goodwill Amortisation Calculator UK

Use the first tab for a clean FRS 102 amortisation schedule, the second for HMRC goodwill relief, and the third to compare amortisation with a one-off impairment.

Calculate annual goodwill amortisation, monthly charge, cumulative amortisation and closing carrying value. This is designed for UK GAAP planning and management accounts, not as formal accounting advice.

Goodwill after the acquisition fair value exercise.
Use a supportable life. If no reliable estimate is possible under FRS 102, do not exceed 10 years.
Usually nil for goodwill unless a very specific supportable basis exists.

Model the fixed-rate goodwill/relevant asset relief that may apply to eligible business acquisitions made on or after 1 April 2019. Relief is limited by the qualifying IP rule, so this tab asks for qualifying IP cost.

HMRC cap is generally 6 × qualifying IP cost for relevant assets.

Compare normal straight-line amortisation with an impairment event. This helps show how a sudden fall in recoverable amount can move expense into one year and reduce later carrying values.

Important 2026 note: accounting goodwill amortisation and UK tax relief are not always the same. Under FRS 102, goodwill is amortised over a finite useful life. For post-1 April 2019 goodwill and relevant assets, HMRC relief can be a fixed 6.5% per year and may be capped by qualifying intellectual property acquired with the business.

How Goodwill Amortisation Works in the UK

Goodwill arises when a company buys a business for more than the fair value of the identifiable net assets acquired. In simple terms, it is the value paid for reputation, customer loyalty, trained workforce, location advantages, future earnings, synergies and other benefits that cannot always be separately recognised as an individual intangible asset. Under UK GAAP, goodwill is not left on the balance sheet forever. It is written down through amortisation over the period in which the acquired business is expected to generate economic benefit.

For most UK companies using FRS 102, goodwill has a finite useful life. Management should estimate that life based on evidence: customer churn, contract length, industry stability, brand durability, expected integration period and the reason the buyer was willing to pay a premium. A small professional practice with personal customer relationships might support a shorter life, such as 5 years. A long-established trading business with recurring revenue, strong local reputation and stable customer contracts might support 10 years or more. If the useful life cannot be estimated reliably, the FRS 102 fallback is a maximum of 10 years.

Plain-English formula: Annual goodwill amortisation = (goodwill cost − residual value) ÷ useful life. In most goodwill calculations, residual value is nil, so a £500,000 goodwill balance over 10 years gives an annual charge of £50,000 and a monthly management accounts charge of about £4,166.67.

The amortisation charge reduces profit in the accounts, reduces the goodwill carrying amount on the balance sheet and builds up accumulated amortisation. It is separate from impairment. Amortisation is planned and systematic; impairment is an additional write-down when the acquired business is not performing as expected or when there is evidence that the carrying value is no longer recoverable. This calculator includes both so that finance teams, accountants and business owners can test the effect of different assumptions before finalising accounts.

Goodwill Amortisation in 4 Steps

Use this simple workflow before you decide the annual charge or publish management accounts.

1

Confirm the goodwill figure

Start with the purchase price, then deduct the fair value of identifiable net assets. Check whether customer lists, brands, software or contracts should be recognised separately from goodwill.

2

Choose a useful life

Estimate how long the acquired benefits will last. Use evidence, not convenience. If a reliable estimate cannot be made under FRS 102, cap the life at 10 years.

3

Calculate the annual charge

Use straight-line amortisation unless another pattern better reflects economic benefits. The annual charge is usually goodwill divided by the useful life.

4

Review impairment indicators

Check for lost contracts, weak trading, integration problems, lower forecasts or market changes. If indicators exist, test recoverable amount and record any extra write-down.

Accounts Amortisation vs HMRC Goodwill Relief

A common mistake is assuming that the goodwill amortisation charge in the accounts automatically equals the Corporation Tax deduction. That is sometimes true for intangible assets inside the corporate intangibles regime, but goodwill has had several rule changes. For acquisitions after 1 April 2019, goodwill and other “relevant assets” may qualify for relief only when they are purchased with a business that includes qualifying intellectual property. Even then, the relief is normally a fixed 6.5% per year on the lower of the relevant asset cost or six times the qualifying IP cost.

This means a company can show a £60,000 annual accounting amortisation charge but receive a different tax deduction. If the goodwill cost is £600,000 and qualifying IP is £80,000, the relief cap is 6 × £80,000 = £480,000. The annual fixed-rate debit would be 6.5% of £480,000, or £31,200. At a 25% Corporation Tax rate, that gives an estimated tax saving of £7,800 for the year. If there is no qualifying IP, goodwill relief may be restricted and the tax benefit might only arise on a later realisation.

Best use of this calculator: use the accounts tab to set the P&L amortisation profile, then use the tax tab to model the possible HMRC fixed-rate deduction. Treat the tax tab as a planning model only, because related-party rules, pre-2019 acquisitions and detailed definitions can change the result.

Quick example: £600,000 goodwill over 10 years

ItemCalculationResult
Accounts amortisation£600,000 ÷ 10 years£60,000 per year
Monthly management charge£60,000 ÷ 12£5,000 per month
Qualifying IP cap example£80,000 IP × 6£480,000 relief base
Fixed-rate tax debit£480,000 × 6.5%£31,200 per year
Tax saving at 25%£31,200 × 25%£7,800

Useful Life Reference Table for Goodwill & Intangibles

Indicative planning ranges for UK accounts. Your final policy should be based on evidence and reviewed with a qualified adviser.

Asset typeTypical useful lifeCommon methodPlanning notes
Goodwill — owner-managed trade5–10 yearsStraight-lineShorter lives often fit businesses where customer relationships depend heavily on former owners.
Goodwill — stable recurring revenue7–10 years+Straight-lineA longer period may be supportable where contracts, brand and retention data justify it.
Customer lists and contracts3–10 yearsStraight-line or churn patternMatch the expected retention period and renewal behaviour.
Brands and trademarks5–10 years+Straight-lineEvidence should support the life, including legal protection and market durability.
Non-compete agreementsContract termStraight-lineUsually amortised over the enforceable agreement period.
Capitalised software3–5 yearsStraight-lineTechnology changes quickly, so shorter lives are common.
Website or platform development2–5 yearsStraight-lineOnly capitalise where recognition criteria are met; marketing content is usually expensed.

What Affects a Goodwill Amortisation Policy?

These factors help support the useful life, impairment review and tax planning assumptions.

FRS 102

Evidence of useful life

Management should document why the selected life is reasonable. Useful evidence includes customer retention history, length of contracts, market position, expected integration period and how long acquired earnings are expected to continue.

Impairment

Trading performance

If revenue, margins or cash flows fall below the acquisition case, goodwill may need an impairment review. Amortisation continues, but impairment can bring a larger expense into the year of the trigger.

Tax

Acquisition date and IP

UK tax relief depends heavily on when the goodwill was acquired, whether the acquisition included qualifying IP, whether the parties were connected and whether special restrictions apply.

Valuation

Separate intangible assets

Some value paid in a deal may be customer relationships, brands, contracts, software or licences rather than goodwill. Separating them can change both amortisation life and tax modelling.

Disclosure

Accounting policy wording

Accounts should explain the amortisation method and period clearly. A generic “goodwill over 10 years” note is weak unless it matches the actual economics of the acquisition.

Cash flow

No direct cash movement

Amortisation is a non-cash accounting charge. It affects profit and carrying value, while any tax relief affects cash only through a lower Corporation Tax payment.

Common Goodwill Amortisation Mistakes

Using 10 years automatically. Ten years is common, but it is not a magic default for every acquisition. If management can make a reliable estimate, the useful life should reflect that estimate. A business bought mainly for short-term customer introductions may need a shorter life. A highly stable business with recurring subscriptions may support a longer evidence-based life.

Ignoring identifiable intangibles. Goodwill is the residual after separately identifiable assets are valued. Customer lists, brands, non-compete rights, licences and technology may need to be recognised separately. That can make the goodwill figure smaller and create different amortisation periods for different assets.

Confusing impairment with amortisation. Amortisation is routine. Impairment is triggered by evidence that the carrying amount may not be recoverable. If a key contract is lost, the acquired business underperforms or forecasts drop, an impairment review may be needed even if the normal amortisation schedule is still being followed.

Assuming the tax deduction equals the accounts charge. For goodwill and relevant assets, UK tax relief may be restricted. Post-2019 relief often uses the 6.5% fixed-rate mechanism and the qualifying IP cap. Always check the acquisition date, transaction structure and whether the asset falls within the rules before relying on the tax output.

Goodwill Amortisation UK — FAQs

Answers to common 2026 questions about FRS 102 goodwill, amortisation, impairment and Corporation Tax relief.

How do you calculate goodwill amortisation under FRS 102?
The usual calculation is straight-line: goodwill cost less any supportable residual value, divided by the estimated useful life. For example, £600,000 of goodwill over 10 years gives £60,000 per year, or £5,000 per month. The charge goes through the profit and loss account and reduces the goodwill carrying amount on the balance sheet. If an impairment is recognised, future amortisation should be recalculated based on the reduced carrying amount and remaining useful life.
What useful life should UK companies use for goodwill?
There is no single compulsory useful life for every company. Management should estimate the period over which the acquired goodwill will provide benefits, using evidence such as customer retention, contracts, brand strength, market position and integration plans. Many small and medium-sized acquisitions use 5–10 years, but the right period depends on the facts. Under FRS 102, if a reliable estimate cannot be made in exceptional cases, the useful life must not exceed 10 years.
Is goodwill amortisation deductible for UK Corporation Tax in 2026?
It depends on the acquisition date, asset type and transaction structure. For post-1 April 2019 acquisitions, goodwill and relevant assets may qualify where they are acquired with a business that includes qualifying intellectual property. The deduction is generally a fixed 6.5% per year on the lower of the relevant asset cost or six times the qualifying IP cost. Some older goodwill, related-party transfers and restricted relevant assets can be treated differently, so material claims should be checked carefully.
What is the difference between goodwill amortisation and impairment?
Amortisation is the planned annual write-off of goodwill over its estimated useful life. Impairment is an additional write-down when evidence suggests the carrying amount cannot be recovered. Amortisation normally happens every year. Impairment is event-driven and may happen if the acquired business loses key customers, misses forecasts, suffers margin decline, faces adverse regulation or no longer supports the value originally paid.
Can goodwill have an indefinite life under UK GAAP?
Under FRS 102, goodwill and intangible assets cannot simply be assigned an indefinite useful life. They must be amortised over a finite life. This differs from IFRS, where goodwill is not amortised and is instead tested for impairment annually. A UK company using FRS 102 should therefore set a finite amortisation period and review it when facts change.
Should goodwill residual value normally be zero?
In most goodwill amortisation calculations, residual value is nil. A residual value would need a strong supportable basis, such as a committed third-party purchase arrangement or a reliable active market for the asset at the end of its useful life. For goodwill, that is uncommon. Most UK management accounts and statutory accounts therefore amortise goodwill down to nil over the selected useful life.
How does goodwill amortisation affect EBITDA?
Goodwill amortisation reduces operating profit and profit before tax, but it is usually added back when calculating EBITDA because EBITDA means earnings before interest, tax, depreciation and amortisation. However, lenders and buyers may still review goodwill amortisation and impairment because they can reveal whether acquisitions are performing as expected. A large impairment is often more commercially important than routine annual amortisation.
What happens when goodwill is fully amortised?
When goodwill is fully amortised, its carrying amount becomes nil and no further amortisation is charged. The original cost and accumulated amortisation may remain in the fixed asset note until disposal or a presentational clean-up, depending on the accounting records. If the business is later sold, the goodwill carrying amount related to that disposal is included in the profit or loss on disposal calculation.
Can I use this calculator for IFRS goodwill?
This page is built primarily for UK GAAP and FRS 102. It is not suitable as an IFRS goodwill amortisation tool because IFRS does not amortise goodwill. Under IFRS, goodwill is tested for impairment annually and when indicators arise. You can still use the impairment tab for scenario planning, but the straight-line amortisation schedule is not an IFRS treatment.
Why does the tax tab use 6.5% instead of the accounts amortisation period?
The tax tab reflects the post-FA 2019 goodwill and relevant asset relief mechanism. HMRC guidance states that relief for eligible post-1 April 2019 relevant assets is a fixed 6.5% per year and is limited by the qualifying intellectual property cap. This is different from an accounts amortisation policy. It is possible for the accounts charge and tax debit to be different in both amount and timing.