Corporation Tax Relief via Patent Box

April 17, 2023

On 1 April 2023 the main rate of Corporation Tax increased from 19% to 25%. R&D tax credits have also been made less generous from this date. The Patent Box scheme is a way of utilising patents to pay a lower rate of Corporation Tax of 10%.

The UK Patent Box scheme allows a company to use a lower rate of Corporation Tax for profits from qualifying patented inventions. This applies for the entire 20-year lifetime of a patent and the savings can be significantly more than the cost of obtaining a granted patent. With the recent changes to Corporation Tax and R&D tax credits, Patent Box is more advantageous than ever.

A company must notify HMRC if they wish to claim relief under the Patent Box. The claim is made after the relevant patent has granted and within two years after the end of the accounting period in which the relevant profits and income arise.

You may be able to get patents for development of your manufacturing processes or products. The key requirements for patentability are that the development is new and involves an inventive step. The development is considered to involve an inventive step if it is “not obvious”. This hurdle may be lower than you think. Patentable developments occur routinely in many companies, even if they are not routinely patented. Now there is a real incentive to identify and patent these developments.

How we can help

We have been advising our clients about Patent Box since it came into effect in 2013 and we have helped many of them save considerable amounts in Corporation Tax.

If you would like to know more about how this might assist your business, please don’t hesitate to reach out to one of our experts.