Income Tax (Trading and Other Income) Act 2005 section 587

Charge to tax on income from sales of patent rights

Section 587 imposes an income tax charge on profits arising from the sale of patent rights, applying to both traders and non-traders, with specific rules for UK residents and non-UK residents.

• Income tax is charged on profits from sales of all or part of any patent rights, after deduction of certain allowable expenditure.
• UK residents are taxed on profits from selling patent rights granted under the laws of any country, while non-UK residents are taxed only on sales of UK patent rights.
• Non-UK resident companies already chargeable to corporation tax on the sale proceeds (for example, those trading in the UK through a permanent establishment) are not subject to this income tax charge.
• "Patent rights" means the right to do, or authorise the doing of, anything which would otherwise constitute an infringement of a patent.