The corporate tax treatment of intangible assets, including patents, acquired or created on or after 1 April 2002 is set out in the corporate intangible regime as detailed in Division D1.6. Equivalent rules to those described below apply for corporation tax purposes to pre-FA 2002 assets. See CTA 2009, ss 911–923, 1271, 1272.
The purchase and sale of all or part of a patent right is a transaction of a capital nature, except in the hands of a person who carries on a trade of dealing in such rights (in which case the purchase or sale is a trading transaction)1. Capital allowances may be claimed on the cost of acquiring a patent right and any sale of that right will give rise to a balancing allowance or balancing charge (see Division B3.6). A balancing charge is restricted to the amount of capital allowances given; if the patent right has increased in value (eg if the invention is commercially successful), the sale proceeds may exceed the original cost and the rules below describe the
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