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Regarding the way how we compute the allowable cost for ‘’other wasting assets’’ like copyrights, (P:L)x(C-S).
What happens with the other part of the cost that becomes now the ‘’not allowable cost’’, is there never a relief for this?
This looks a bit unfair. Let’s say I buy the copyright of a CD for £1000 and then make sales of singles CDs for a total of £2000, then I should be able to deduct the original cost (1000) in FULL before being taxed on the 2000.
Sadly it is not you or I that gets to write the tax rules or make fairness judgements – that is for HMRC to decide!
This is a large subject with much to learn so focus entirely on learning what you need to know to pass this exam!
Ps your example above also shows a misunderstanding of the issue – the allowable cost of the copyright is deducted from the sale proceeds of the copyright itself when it is sold
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