Amortisation spreads the cost of an intangible asset (or a loan) over time. This guide explains both common meanings.
Published July 2026 · Updated July 2026
Amortisation is the intangible-asset cousin of depreciation: it spreads the cost of things you can't physically touch, software, licences, patents, goodwill, over the period they benefit the business.
Amortisation also describes repaying a loan gradually through regular instalments, where each payment covers interest plus a bit of the capital, so the balance reduces to zero over the term.
Depreciation is for tangible assets (equipment, vehicles); amortisation is for intangible assets (software, licences). The idea, spreading cost over time, is the same.
It depends on the asset and the rules; intangibles have specific tax treatment. Check with an adviser for your situation.
Source: Investopedia ↗. This glossary is written for small business owners, so definitions are simplified. Tax rates and thresholds reflect 2026/27 UK rules and change over time. Berified does not provide accounting, tax or legal advice; always check the source or a qualified adviser.