Firstly, only companies liable to pay Corporation Tax are eligible for the Patent Box UK. The company also needs to be making a profit from commercially exploiting patented inventions to receive the reduction in corporation tax.
If you are not liable to pay UK corporation tax (i.e. if you made a profit, you would pay tax) you are unable to elect in to the Patent Box UK scheme.
To be eligible, your company must own qualifying patents or exclusive licenses for the rights to those patents. 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.
The benefit of the Patent Box is available through legal ownership of the patent or through holding an exclusive licence to commercially exploit a patent.
The claiming company, or if part of a group, another group company, must have been involved with the R&D to develop the IP and to pass the test that they have undertaken qualifying development for the patent. This means a significant contribution to either a product incorporating the patented invention or the creation or development of the patented invention. The company needs to have been involved with the development and exploitation of the IP.
If your company is part of a group it will need to have developed its own IP portfolio or have been actively engaged (planning and decision making) in the R&D undertaken by another group member. If this test is failed, there is no claim.
We support start-ups and early-stage businesses looking for investment, to grow and develop by applying into the tax relief schemes. Contact us for further information.
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