Income Tax (Trading and Other Income) Act 2005 section 51

Patent royalties

Section 51 deals with the deductibility of patent royalty payments made by a trader as an expense of the trade.

• Royalties or other payments made for the use of a patent in a trade are allowable deductions when calculating trading profits.
• The deduction applies to payments made for the right to use a patent that is employed in the course of the trade.
• This provision originates from the earlier rules in section 74(1)(p) of the Income and Corporation Taxes Act 1988 (ICTA).
• The section was subsequently amended by the Income Tax Act 2007 as part of the broader rewrite and consolidation of income tax legislation.