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CIRD220220 | Patent Box: relevant IP profits: relevant IP income: head 3: proceeds of realisation

From HM Revenue & Customs · Corporate Intangibles Research and Development Manual

Head 3 is the income from the sale or other disposal of a qualifying IP right or exclusive licence in respect of such a right.

The relevant IP income is the gross income from the sale. RIPI will normally be the taxable credit recognised under CTA09/PART8/CHAPTER4 on realisation, as set out in CTA09/S735 , S736 or s738. For disposals of pre-2002 patents, where the company chooses to spread the profit on a disposal for tax over a six year period, RIPI will be the part brought into charge to tax in the relevant year.

Head 3 does not include sales or other disposals of non-qualifying IP rights, even if they are:

  • over inventions that the company also protects by qualifying IP rights; or

  • sold or disposed of in the same transaction as those qualifying IP rights.

Where qualifying IP rights are sold together with other rights for a single price then the mixed income rules will be relevant (CIRD220290)