Patent Box provides a 10% rate of UK corporation tax for companies exploiting patented inventions or innovations protected by certain Intellectual Property (IP) rights. Available since April 2013, opt-in is required as it is not automatic.
As with the new R&D tax relief regime, the government wants to create a competitive tax environment for innovative companies. It wants to inspire them to locate high-value jobs associated with the development, manufacture and exploitation of patents in the UK. Therefore applying for a 10% corporation tax rate is something they are actively encouraging.
A wide range of companies which own and use patents and other IP, are likely to benefit and achieve substantial savings.
The 10% corporation tax rate can apply to various income sources, including;
Sales of patented products
Sales of products incorporating patented items
Sales of bespoke spare parts for such products
Licence fees or royalties for granting rights over patents and other associated IP rights
Income from the sale of patent rights or exclusive licences over patent rights
Income received as damages for infringement or alleged infringement of patent rights
Deemed notional royalty income for patented tools and patented processes used to create non patented services or products for sale
Things to remember;
The Patent Box is discretionary and does not apply automatically – companies must opt-in
It must be actively claimed in the company’s corporation tax return
A group structure could affect the amount of Patent Box tax savings
Profits earned while waiting for the patent to be granted can still qualify for the 10% tax rate
To opt-in for Patent Box, contact us for a personal consultation.
Preparing for Patent Box
Patent Box is an optional scheme, so you do have to sign up for it to benefit. You'll also need to look at how your company's set up to make sure you're getting the best from it. For example, making a valid R&D tax credit claim could easily shift more of your taxable profits into that all-important 10% Patent Box rate. Remember, your innovation could still qualify at the "patent pending" stage, as long as you get it all set up in advance.
RIFT R&D Tax Credits are the experts in hunting down all the hidden treasures on the research and development map. We'll guide you through the process of using Patent Box, and can even recommend the right patent attorney if you need one. Contact us today to see how we could help.
If you would like to opt in to Patent Box or know more about what R&D tax credits are and how they could benefit you, get in touch now on 01233 653008 or contact us today to see how we can help turn your inspiration into real-world benefits for your business and beyond.