Patent Box

What is Patent Box?

Introduced 1 April 2013, Patent Box is a tax regime which allows for companies to apply for a lower rate of Corporation Tax on profits earned.

How much can I save?

If eligible, a company can reduce some of its Corporation Tax to 10%.

Am I eligible?

  • A company will only be able to utilise the Patent Box tax relief scheme if it is liable for Corporation Tax.
  • In order to apply the company must elect in writing to enter Patent Box
  • The company must own an exclusive licence in the patents
  • They must undertake qualifying development on the patents which means they must have either created or significantly contributed to the development of the intellectual property (IP), or developed the item incorporating the IP
  • The patent must be granted by the UK Intellectual Property Office or European Patent Office (additional list of certain country patent offices also qualify)

Why is only some of a company’s Corporation Tax reduced to 10%?

The Patent Box only applies to a proportion of profits made from the company’s IP. The actual calculations of how much Corporation Tax a company can save is incredibly complex, dependent upon when the company first elects into Patent Box and which method of calculation is available as a result of that.

How do I claim Corporation Tax relief from Patent Box?

You can do this in the computations accompanying your annual Company Tax Return or separately in writing to HMRC.

More information can be found here.

Ridgefield Consulting have helped companies elect into Patent Box. We can make sure your company qualifies and help calculate the true amount you can save. Contact us on 01865 24 55 11 or email info@ridgefieldconsulting.co.uk

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