Jurisdiction(s):
United Kingdom

Key definition

Amortisation definition

What does Amortisation mean? In lending practice, amortisation is the scheduled repayment of a loan’s principal in instalments over the term, with interest calculated on the reducing balance, rather than a single bullet repayment at maturity. It is a descriptive finance term (not generally defined by legislation or case law) and is given effect by the finance documents, typically through an amortisation schedule or repayment profile. Key features include: fixed or “sculpted” capital repayments; interaction with prepayment provisions (early repayments usually reduce future instalments or the final maturity); and impacts on covenant tests and cash flow (for example DSCR in project finance)....

Intangible fixed assets: UK corporation tax and accounting—capitalisation, amortisation, impairment, revaluations, value mismatches, subsequent expenditure, and the 4% fixed-rate election (CTA 2009 Pt 8; FRS 102/IAS 38)

Published by a LexisNexis Tax expert

Practice notes

Under the corporate intangible assets rules in Part 8 of the Corporation Tax Act 2009 (CTA 2009), the default position is that profits and losses relating to a company’s intangible fixed assets (IFAs) are calculated and recognised as credits and debits for corporation tax purposes, in step with the accounting treatment applied to those IFAs. In other words, a company’s accounts, drawn up in line with generally accepted accounting practice (GAAP), provide the platform from which the taxable and relievable items and the relevant amounts relating to the company’s IFAs are determined. This principle is often termed ‘tax following the accounts’. The effect of the tax-follows-the-accounts approach is that, where an accounting loss is recognised in arriving at a company’s profit and loss in respect of capitalised expenditure incurred to create or acquire an IFA, whether through amortisation charges or following an impairment review, a debit will generally be brought into account for tax purposes. This ensures tax relief is available for the depreciation of an IFA over its useful life...

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Web page updated on 21/05/2026

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