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Expert Corner

Intellectual Property expert

Patent Box – is there something in it for you?

The new “Patent Box” tax regime is due to come into force in 1 April 2013, giving the opportunity to UK companies to reduce their UK corporation tax rate on qualifying profits to 10% (rather than the current 26% rate, reducing to 23% in April 2013). Qualifying profits are those attributable to qualifying Patents.

The main objectives of the Patent Box are to incentivize companies to invest in the UK and to retain and commercialise innovation within the UK.

How do we qualify?

A company must hold a qualifying patent either as an applicant/owner or as an exclusive licensee (exclusivity must be across one or more countries or territories). The legislation also allows for ownership within a group structure or via cost sharing arrangements.

The company must also receive qualifying profits relating to the qualifying patent(s).

Companies must also fulfill a development condition. They (or a group member) must have been involved in the creation of the patented invention or have performed a significant amount of activity to develop to patented invention, a product incorporating the patented invention or the way in which the invention is applied.

Note- if the development conditions are only met due to another group member the company must show active management of the qualifying patents (which may include deciding where to maintain protection, granting licenses or researching alternative uses for the invention.

 

For further information please contact Claire Rutherford.

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