Patent Box tax relief rewards UK companies that are driving innovation and developing new patented inventions.
Patent Box is designed to encourage companies to keep and commercialise intellectual property in the UK. Patent Box tax relief rewards UK companies that are driving innovation and developing new patented inventions.
Companies can use the Patent Box to reduce Corporation Tax on profits. Your company could pay a reduced rate of 10% Corporate Tax if it exploits patented inventions and innovations.
TBAT specialises in providing comprehensive innovation support, assisting businesses in both electing into the patent tax relief scheme and handling the intricate process of calculating the tax relief you’re entitled to receive.
To claim Patent Box Tax Relief, your company must meet the following criteria:
In practice, this means that you do not need to own the patents to qualify for the scheme. Many patent holders license their technology to then pass on to other parties, for them to develop. Your company can still qualify for the scheme without being the patent holder.
Patents can only qualify if they are granted by the UK Intellectual Property Office, the European Patent Office, or specified EEA countries. The regime notably excludes patents granted by patent offices in France, Spain, Italy, the US, and Japan.
Companies must elect into the Patent Box to apply the lower rate of Corporation Tax which is 10%. This relief was introduced in phases from 2013 up until 2017.
An election into the regime must be made by the company within two years after the end of the relevant accounting period in which relief is claimed.
A company can elect in early, before a patent has been granted, to enable the company to claim tax relief on qualifying profits generated in the period from filing the patent application and the patent grant – the patent pending period. The accumulated relief is claimed in the tax return for the year the patent is granted.
Patent Box and Research and Development (R&D) Tax Relief work hand in hand with each other. While both offer tax incentives, they differ in their focus. R&D tax relief rewards businesses based on their R&D expenditures, providing tax relief or credits and Patent Box offers a reduced tax rate on profits derived from UK or specific European patents.
TBAT are experts in innovation support and we can help businesses to elect into the tax relief scheme as well as doing all the hard work of calculating the tax relief that you’re eligible to receive.
With our support, you can be assured that you will make a maximised and legitimate claim that will give you the opportunity to reinvest your tax savings in the future of your business. Contact us here.
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