Taxes Consolidation Act 1997 section 761

Manner of making allowances and charges

Section 761 sets out how allowances and charges in respect of expenditure on patent rights are given, distinguishing between traders who use the rights in their trade and other persons.

• Where a person carries on a trade and the patent rights are used for the purposes of that trade, any allowance or charge is made in taxing the trade under Case I of Schedule D.
• This treatment does not affect the separate right to deduct patent-related expenses in computing trading profits, nor the charge under Case IV on the sale of patent rights for a capital sum.
• Where the person is not a trader (or the rights are not used for trading purposes), an allowance is given by way of discharge or repayment of tax and can only be set against income from patents.
• A charge arising outside a trading context (for example, a balancing charge) is made under Case IV of Schedule D.