Income Tax (Trading and Other Income) Act 2005 section 591

Non-UK resident sellers: election for spreading

Section 591 deals with how non-UK resident sellers of patent rights who receive their sale proceeds as a lump sum (rather than in instalments) are taxed, and provides an option to spread the tax charge over six years.

• Where a non-UK resident receives a lump sum from selling patent rights, the full amount is normally taxed in the year the proceeds are received
• The seller can elect to spread the charge equally over six tax years — one-sixth in the year of receipt and one-sixth in each of the next five years
• The election must be made no later than the first anniversary of the normal self-assessment filing date for the tax year in which the proceeds are received
• Any necessary repayments and assessments will be made for each affected tax year to give effect to the election, subject to adjustments where tax has already been deducted