Income Tax (Trading and Other Income) Act 2005 section 593

Death of seller

Section 593 deals with what happens to the remaining spread income from a sale of patent rights when the seller dies before the spreading period has ended.

• When a seller of patent rights dies, any amounts that would have been taxed in future years under the spreading rules are instead all taxed in the year of death.
• This applies to both UK resident sellers (who spread income automatically over six years) and non-UK resident sellers (who elected to spread income over six years).
• The seller's personal representatives may elect to reduce the resulting tax bill by recalculating it as if the remaining amounts had been spread equally over the "lifetime tax years" — that is, from the year the proceeds or instalment were received through to the year of death.
• Any such election must be made no later than the first anniversary of the normal self-assessment filing date for the tax year in which the death occurs.