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HMRC internal manual

Capital Allowances Manual

Patents: General: Definitions

CAA01/S464, CAA01/S483, CAA01/SCH3/PARA95 (3) and ICTA88/S533 (1)

A UK patent is a patent granted under the laws of the UK.

Patent rights are the right to do or authorise the doing of anything that would, but for that right, be an infringement of the patent.

Income from patents is:

  1. any royalty or other sum paid in respect of the user of a patent, and
  2. any balancing charge assessable under the capital allowance provisions, and
  3. any amounts assessable under ITTOIA/S587, S593, S594 or ICTA88/S524 CA75200 or ICTA88/S525 CA75220.


The commencement of a patent is the date from which the patent rights become effective. This is based on the date of acceptance of the complete specification of the patent by the Patent Office. It is not necessarily the same as the date on which letters patent are granted. It will usually be earlier.

Example After Georgio has invented his thermo nuclear pizza oven the Patent Office accepts the complete specification of the patent on 4 July 2003. This is the date from which the rights become effective but letters patent are not granted until 1 September 2003. The commencement of the patent is on 4 July 2003, the date of acceptance by the Patent Office, not 1 September 2003, the date on which the patent is granted.

The date on which foreign patent rights commence is fixed by the relevant provisions of the patent law of the territory in respect of which they are granted. For example, if Paul is granted US patent rights for an invention that he uses in the UK the date on which the rights begin is fixed by the US patent law about when patent rights begin.

A person may incur expenditure on a right to acquire patent rights in an invention for which a patent has not yet been granted. He is treated as incurring expenditure on the purchase of patent rights. If the patent rights are later acquired the expenditure on the right to acquire them is treated as expenditure on buying them.

A person who receives a payment for a right to acquire patent rights is treated as receiving the proceeds of a sale of patent rights. This happens whether or not a patent is granted.