Capital Allowances Act 2001 section 100

Balancing charges

Section 100 sets out when a balancing charge arises on the sale of patent rights and how the amount of that charge is calculated.

• A balancing charge arises when a person sells some or all of their patent rights and the capital element of the net sale proceeds exceeds any unrelieved qualifying expenditure for that period.
• Where there is no unrelieved qualifying expenditure, the balancing charge equals the full capital proceeds; where some unrelieved expenditure remains, the charge equals only the excess of proceeds over that unrelieved amount.
• The first balancing charge is capped at the total writing-down allowances actually given in respect of the expenditure.
• Any second or subsequent balancing charge is capped at the total writing-down allowances given, reduced by the amount of any earlier balancing charges.