Capital Allowances Act 2001 section 480

Persons having qualifying non-trade expenditure: corporation tax

Section 480 explains how capital allowances and charges relating to qualifying non-trade expenditure on patents are given effect for corporation tax purposes.

• Allowances for qualifying non-trade expenditure are deducted from the company's patent income for the current accounting period
• Where allowances exceed patent income, the excess is carried forward and set against patent income of subsequent accounting periods, provided the company remains within the charge to tax
• Charges arising on qualifying non-trade expenditure are treated as patent income of the company
• Treating charges as patent income means they can be reduced by allowances for qualifying non-trade expenditure, providing a natural offset mechanism