Patent Box

Patent Box was introduced as part of a range of schemes to encourage innovative companies to keep their intellectual property (IP) in the UK.

Patent Box Key Facts

  • Pay just 10% Corporation Tax on qualifying profits
  • You must own or exclusively licence a Patent
  • Applicable to UK, European and EEA Patents
  • Applies to profits attributed to products/services utilising the patented technology
  • Works seamlessly in conjunction with R&D Tax Credit legislation - claim both!
  • Claims can be made up to six years from the date of the original patent application
  • Wide range of qualifying income (direct sales, license fees, royalties, income from infringements.)

Patent Box offers a generous rate of 10% corporation tax either to products that included patented elements or to companies that sold patented products under an exclusive licence.

As a result, in July 2016, the scheme was reformed, however, the calculation of qualifying profits is complex and requires a forward-thinking approach to accounting.

Aspen Waite advise on IP issues and making appropriate use of both R&D Tax Credits and Patent Box to maximise the benefit to your company.

Open up the Patent Box

Patent Box applies to profits attributed to products/services that utilise the patented technology - whether sold as a patented item or a product that contains a patented part.

Patent Box goes hand in hand with claims for Research and Development (R&D) Tax relief - and companies will not be penalised for claiming both forms of Tax relief.

For Patents granted after 30 June 2016, the amount of benefit achievable under the Patent Box is linked to the proportion of R&D expenditure incurred.

How it works

A company files a number of patents after 1st July 2016 and elects to be part of the scheme. A framework is used to calculate the “IP Profit” and Patent Box relief is then given to any income generated from those IP Assets.

The scheme now also requires companies to separate income and expenditure for each income stream, identifying non-IP income and applying the calculations to each stream individually.

It should be noted that this can be quite cumbersome, but there are systems and processes that can be used to ease additional accounting administration.

The calculation for working out Patent Box is complex, with many factors and considerations to be aware of. It is therefore recommended that any company considering a Patent seeks proper advice.

Take the next steps

If you are generating profit from IP assets it is worth considering Patent Box under the new plans.

Even with the future reduction in the Corporation Tax rate to 17% in 2020, successful use of Patent Box will make a difference to your liability.

We advise all our clients to review their product lines to see if any patentable technologies or products exist.

Speak to our team to find out more about your Patent Box eligibility and how the scheme could help your business.

Get in touch for expert advice and solutions for you or your business.

Call us on: 01278 445151