Overall Income

The overall income is calculated as the gross income less any direct expenditure (including the capital allowances) of this asset, i.e. the gross profit. Overall income includes, but is not limited to, royalties received for the use of the intangible asset, trading income from the disposal of qualifying asset and embedded income earned from the qualifying asset.
Capital gains arising from the disposal of a qualifying asset are not included in the overall income and are fully exempt from tax.

Uplift Expenditure

The up-lift expenditure is the lower of:

• 30% of the qualifying expenditure and
• The total acquisition cost of the overall expenditure and any R&D costs outsourced to related parties.

Overall Expenditure

The overall expenditure is the sum of:

• The qualifying expenditure and
• The total acquisition costs of the qualifying asset and any R&D costs outsourced to related parties incurred in any tax year.

Cumulative nexus fraction

The nexus approach is an additive approach; the calculation requires both that qualifying expenditure includes all qualifying expenditures incurred by the taxpayer over the life of the IP asset and that overall expenditure includes all overall expenditures incurred over the life of the IP asset.