ADS member Jumpstart are the UK’s leading Innovation Funding specialists providing a complete service in claiming R&D tax relief and Patent Box on behalf of companies. Here Karen Baker, technical analyst at Jumpstart, shares four important facts about Patent Box.

Patent Box is part of the Government’s range of incentives to encourage companies to innovate and maintain the UK’s world-leading position in many sectors by incentivising them to commercialise their patents and R&D in the UK.

  • Are you a UK-based company that pays UK Corporation Tax?
  • Do you hold intellectual property (IP) which generates profit for your company?

If so, you could be entitled to pay a much lower rate of corporation tax on those profits derived from your patents.

Here are 4 facts about Patent Box your business simply can’t afford to ignore:

The Patent Box scheme is very generous

The Patent Box scheme gives companies access to 10% corporation tax on any profits directly linked to the commercialisation of patents registered in the UK intellectual property office or the European patent office. What’s more, once you have elected in to the patent box scheme you can claim this relief on profits over the life of the patent.

Patent Box isn’t just for patent holders

Patent Box applies to:

  • Patents granted by the intellectual property offices UK IPO and EPO;
  • Medicinal & botanical IP rights (e.g. supplementary protection certificates);
  • Exclusive licences for patented inventions developed, exploited and defended by the licensee;
  • Patents acquired from another company, actively managed or developed by the acquiring company.

All IP related income qualifies for Patent Box relief

Once you have registered for the scheme you can then calculate a “patent box profit” annually for each patent you are commercialising. Profits will be calculated using revenue streams from global sales of:
patented products;

  • Products incorporating one or more patented invention;
  • Bespoke parts used in the patented product(s);
  • Licence fees, royalties or proceeds from the sale of the patent;
  • Compensation/damages resulting from patent infringements.

You can claim both R&D tax relief and Patent Box at the same time

As the Patent Box figure is calculated using the relevant IP income and profits, with the R&D expenditure taken into consideration in calculations, the two schemes can be investigated in tandem.

Patent Box relief is not state aid therefore R&D tax credits can still be claimed.

Seek expert advice to generate maximum tax benefit.

Companies need to plan and review their IP portfolio carefully, to ensure they realise the full benefit of the Patent Box regime.

For more information, contact the Jumpstart team on 0131 240 2900 or