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HMRC internal manual

Corporate Intangibles Research and Development Manual

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


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. However, RIPI related to this income will be the amount included in total gross income. RIPI will therefore normally be the taxable credit equal to the excess of proceeds of realisation over the accounts carrying value of the qualifying IP right, as set out in CTA09/S735 and S736. 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)