How do I claim Patent Box Tax Relief?

Claiming Patent Box Relief

Four key things need to be in place for a company to be able to claim patent box relief:

1. Be a UK company that is liable for UK Corporation Tax
2. Has a patent or exclusive licence for patented IP granted by the UK Intellectual Property Office or selected other international grant awarding bodies
3. To meet the Qualifying ownership test
4. To pass the ”Active ownership” test (if part of a group) – to have developed or actively manage the IP.

Assuming the company meets the above four criteria, there is every chance a company can take advantage of Patent Box Relief.

The Process

The start of the process is to “Elect” in to patent box. Once elected in, the company needs to prepare the reporting to support the calculations need to work out the reduction in corporation tax on the profits derived from the sales of the items that utilise the patented technology/process. The claim is made through the tax computation and tax return to HMRC.

What is involved in a Patent Box Election?

The opt-in is merely a simple letter to the company’s tax office stating the company wishes to opt-in under section 357G of the Corporation Tax Act 2010. The letter must also state the Company’s identity (usually the CRN and UTR numbers) and specify the first accounting period for which the election will apply.

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 Patent Box regime must be made by the company within two years after the end of the relevant accounting period in which relief is claimed. i.e. if you want to take advantage of patent box on IP derived profits for year ending 31^st March 2020, the election needs to be made by 31^st March 2022.

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.

I don’t have a patent, what other types of IP qualifies for Patent Box?

There are a number of other qualifying intellectual property rights that can be attributed to Patent Box. These include IP such as regulatory data protection (also called ‘data exclusivity’), supplementary protection certificates and plant variety rights.

I don’t have a patent, what other types of IP qualifies for Patent Box?

There are a number of other qualifying intellectual property rights that can be attributed to Patent Box. These include IP such as regulatory data protection (also called ‘data exclusivity’), supplementary protection certificates and plant variety rights.

How TBAT can help

We support start-ups and early-stage businesses looking for investment, to grow and develop by applying into the patent box relief schemes. Contact us for further information.