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Patent Box

Patent Box relief utilises a new scheme aimed at companies who own UK patented technology and innovations. It allows the patent owner to pay just 10% corporation tax on any profits that arise from the sales of qualifying patented technology. With careful tax planning, businesses can maximise the level of profits that fall within the criteria for Patent Box, making this a viable source of tax relief.

Patent Box is applicable to a wide range of industries filing patents. These include pharmaceutical, software and information technology, manufacturing, energy and utilities, telecoms, aerospace, defence plus some other consumer related and media businesses. It can be used in conjunction with R&D tax credits, which means some business owners could benefit from double taxation relief.

How to benefit from Patent Box Tax Relief

Tapered Patent Box relief operates as follows:

  • 0% of the total tax relief available can be applied to profits generated from April 1st 2013
  • The relief will be phased in from 1 April 2013 and the lower rate of Corporation Tax to be applied will be 10%.

Where does Patent Box relief apply?

The Patent Box regime applies to all patents granted by the UK or European Patent Office and certain other European jurisdictions. Other jurisdictions to qualify will be confirmed shortly. In addition to ordinary patents, Patent Box also applies to other qualifying intellectual property rights such as regulatory data protection, supplementary protection certificates and plant variety rights.

How to benefit from Patent Box tax relief now.

If you own patents and wish to take advantage of Patent Box, it is important to isolate precisely the source of any revenues. It will be necessary to demonstrate whether sales accounted for under the Patent Box regime do actually relate specifically to a particular patent, or are derived from a combination of other sources.

The calculations to undertake in order to establish this can be quite complex and we recommend getting specialist advice on how to go about isolating the so-called ‘Patent Effect’ before making an approach to HMRC.

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31 July 2020 - Normally an important deadline!

All taxpayers due to make self-assessment tax payments on 31 July 2020 can now delay their payment due to the disruption caused by Coronavirus. This includes self-employed taxpayers and also company directors who pay self-assessment tax on dividend income.

Read more in our coverage of Coronavirus and business support from the Government.