Capital Allowances Act 2001 section 476

Disposal value of patent rights

Section 476 defines what a "disposal receipt" is in relation to patent rights and explains when and how disposal values must be brought into account when patent rights are sold.

• A disposal receipt is a disposal value that must be brought into account under this section or under certain provisions of ITA 2007, CTA 2010, or any other relevant enactment.
• When a person sells all or part of any patent rights on which they have incurred qualifying expenditure, a disposal value must be brought into account for the chargeable period in which the sale takes place.
• The disposal value is the net sale proceeds, but only to the extent those proceeds consist of capital sums — any element that is income in nature is excluded so that it is not taxed twice.
• The disposal value is subject to a cap under section 477, which ensures that the total disposal values brought into account for particular patent rights cannot exceed the qualifying expenditure originally incurred on purchasing those rights.