Patent Box is a government scheme to encourage UK companies to develop and commercialise intellectual property. The tax relief provided under the Patent Box scheme potentially enables companies to reduce their Corporation Tax rate on applicable worldwide profits from 25% to an effective rate of 10%.
A single granted UK (or European) patent is sufficient to claim Patent Box tax relief on applicable worldwide profits. The relief can be claimed in addition to R&D tax credits, and can be claimed in a recurring manner in connection with on-going profits for the entire 20-year lifetime of the patent. There is no monetary limit to the amount of relief that can be claimed.
The amount of Patent Box tax relief that can be claimed by a company is unaffected by the scope of the patent(s) or the number of patents covering the product if a granted patent is obtained for a product innovation. If, for example, a patent is obtained for a component part of a wider system, it may be possible to obtain Patent Box tax relief for worldwide profits derived from the sale of the wider system, potentially reducing the applicable tax rate from 25% to 10%.
Patent Box strategy is one of our firm’s specialisms. We have many clients that obtain more in tax relief from the Patent Box scheme than it cost to obtain and maintain the patents via our firm. For successful commercial products, the relief can be much, much greater than the cost.
We have written a comprehensive guide explaining how to make the most of Patent Box tax relief. Please get in touch via our contact page if you would like a free copy of the guide.
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