Capital Allowances Act 2001 section 98

Reduced writing-down allowance

Section 98 sets out how the writing-down allowance for patent rights expenditure is reduced when a person sells part of their patent rights during a chargeable period and the unrelieved expenditure exceeds the sale proceeds.

• When part of patent rights are sold and unrelieved qualifying expenditure (U) exceeds the net capital sale proceeds (N), a reduced writing-down allowance applies
• The reduced allowance is calculated as (U − N) ÷ Y, where Y is the number of complete years remaining in the writing-down period at the start of the chargeable period
• The recalculated allowance continues to apply for subsequent chargeable periods until a further part-sale triggers a fresh calculation
• If a chargeable period is longer or shorter than a year, the allowance is proportionately increased or reduced