The “Patent Box” is a new form of tax relief that has been introduced by the Government for companies who undertake innovation.
It will provide an opportunity for those companies who hold patent interests and use them in their business to reduce their UK tax liabilities. The regime offers a headline 10% tax rate on the profits generated from exploiting patented technologies which compares favourably with the rates of corporation tax at 20% and above.
In order to qualify the company must be a) liable to UK corporation tax and be generating income from patented products, processes or services, b) own or exclusively license patents which have been granted by the UK/EU Patent Offices and c) carry out qualifying development of ides, or be involved in the active management of a group of companies which carries out the qualifying development.
Companies who fit the criteria or are planning to patent their ideas could save a significant amount of tax using the “Patent Box”.