Corporation Tax Act 2010 section 357BI

Excluded debits

Section 357BI defines which debits are classified as "excluded debits" and must therefore be removed when calculating relevant IP profits under the patent box regime.

• Debits treated as trade expenses arising from loan relationships or derivative contracts are excluded debits
• Additional deductions obtained for research and development expenditure relating to a trade are excluded debits
• Additional deductions obtained for qualifying expenditure on a theatrical production are excluded debits
• These items are stripped out at Step 3 of the relevant IP profits calculation to ensure the patent box deduction applies only to routine trading profits from IP exploitation