The “Patent Box” allows companies to apply a reduced rate of corporation tax to profits attributable to granted UK and European patents.
This is a great incentive to UK incorporated companies to commercialise existing patent products/processes and to develop new innovative products. Here are a few key facts to help you understand why and how to take advantage of Patent Box:
Phased in from 1 April 2013, the Patent Box will allow companies to elect to apply a 10% rate of corporation tax to worldwide qualifying profits;
Qualifying IP rights include patents granted by the UKIPO and the EPO, in addition to supplementary protection certificates and plant variety rights;
The Patent Box requires only one patent granted to an invention in order for the associated product to qualify.
Undertake a due diligence exercise to ascertain what patents and what associated income/profit will fall within the Patent Box for your business;
Ensure that accounting records are in place to calculate income/profits associated with Patent Box inventions. Any income arising between the application and grant date of the qualifying patent may qualify as income within the Patent Box (for several years prior to grant). Reasonable pre-commercialisation expenses can be considered when assessing profits;
Review ownership issues to check that all entities that own Patent Box IP correspond to the entity which exploit and profit from it;
Consider the commercial advantages of accelerating grant of any pending patent applications to allow earlier claims to the benefits of Patent Box. We can advise on the costs of accelerating the patent application process.
We are happy to discuss the Patent Box with you or your accountants in more detail.
THE PATENT BOX