The patent box regime offers a 10% corporation tax rate on profits generated from UK and/or European patents and could lead to significant tax savings.
Maximising the opportunity to gain benefit from this regime requires some careful consideration including:
Patent ownership requirements – the reduced tax rates may encourage some companies to patent when previously they hadn’t. They need to factor in the time it takes to file a patent application and the time delays before grant of the patent.
Calculation of the claim – there is a structured approach to the calculation of the claim and this will mean that it is important that companies identify streams of income that arise from their patents.
The claim also links R&D expenditure with creation of the patent and the patented invention. For companies in both UK and International groups, it may be necessary to consider how IP is held and managed within the group to ensure tax savings are achieved. There are complexities and pitfalls to be avoided.
Because of these complexities and the very real potential to gain benefit from patent box we like to consult with clients at an early stage to define appropriate strategies to ensure that they are making the most of the regime.