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B3.602 Patent rights—qualifying expenditure for capital allowances

The treatment of patent expenditure for companies on or after 1 April 2002 falls within the corporate intangible regime, see D1.6. The term patent is not defined in tax legislation but in general usage of the word a patent is a government granted authority or licence which gives the holder the exclusive rights, for a set period, to exclude others from making, using or selling an invention. The holder of the patent can grant rights or licences to others to use that patent and thereby generate income. The legislation covers patents granted anywhere in the world except where it specifically refers to a UK patent¹.

Patent allowances are capital allowances which are available to a person who incurs qualifying expenditure on the purchase of patent rights². Patent rights are defined as the right to do or authorise the doing of anything which would, but for that right, be an infringement of a patent³. Therefore a person who acquires a licence in respect of a