761 Manner of making allowances and charges

(1) An allowance or charge is to be made to or on a person in taxing the person’s trade (that is, in charging the person’s trading profits in the case of income tax or in computing trading income in the case of corporation tax) if the patent rights in question are owned by that person for the purpose of a trade which that person is carrying on. This does not, however, apply to a charge under section 757 as distinct from a balancing charge made for the purpose of withdrawing writing-down allowances which are ultimately seen to have been too generous in relation to the depreciation of the rights actually occurring.

(2) Where an allowance is to be made to a person who is not a trader, it is made by way of discharge or repayment of tax in the normal way but is available only against income from patents. In so far as an allowance cannot be given against patent income in the year of claim, it can be carried forward for offset against patent income in subsequent years.

Relevant Date: Finance Act 2021