Patent Box: relevant IP profits: total gross income of a trade: finance income and excluded income
CTA10/357CB, s357BG and s357BHB
Finance income is excluded from total gross income for the Patent Box computation.Finance income has been similarly excluded from the new regime
Finance income means:
- any trading loan relationships credits (including credits such as interest and exchange gains on money debts);
- any amounts that GAAP treats as arising from a financial asset (such as dividends or the sale of shares). This would be likely to include income arising to a bank or other financial trader from its proprietary trading positions;
- any return that is economically equivalent to interest (using definitions set out in the disguised interest rules in CTA09/S486B). This would include the return arising to a lessor under a finance lease; and
- any trading credits in respect of a company’s derivative contracts (CTA09/S573). This would include gains, including exchange gains, on instruments used for hedging trading transactions.
Other income which is excluded from the Patent Box regime is summarised below:
- income arising from oil extraction activities or oil right
- income attributable to a non exclusive licence in respect of a qualifying IP right, and if an exclusive licence also confers on the company any non exclusive right that income should be apportioned on a just and reasonable basis.
- Income arising from RDEC credits
- Income from a foreign branch of a qualifying company, where that foreign branch is treated as exempt from Corporation Tax.