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What is thE PATENT BOX INCENTIVE?

The Patent Box incentive was introduced in phases, over the course of four years, in order to encourage UK businesses to commercialise intellectual property within the UK. The relief allows eligible companies to apply a lower rate of Corporation Tax (10%) to profits generated  from its patented inventions.

When handling the Patent Box application alone, it can become quite a complicated process. However, with our Teams complete support, you can simply sit back, avoid the Corporation Tax increase, and reap the benefits your business shall acquire!

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Patent Box claims are made by businesses in various different sectors!

In order for your business to benefit from The Patent Box incentive, your company must abide by the following:

  1. Must be liable to Corporation Tax.
  2. Be profitable from exploiting patented inventions.
  3. Must have undertaken qualifying development on the patented inventions.
  4. Own an exclusive licence for the patented inventions.
  5. Must have elected for the Patent Box within 2 years of the accounting period, in which the relevant profit and income arose.
 
If you believe that you could benefit from the Patent Box incentive… Contact one of our Consultants today!

In order for a Patent to be deemed eligible for Patent Box your company must own an exclusively licenced patent, granted by the following:

  1. The UK Intellectual Property Office.
  2. The European Patent Office.
  3. The following countries in the European Economic Area: 

          Austria, Bulgaria, Czech Republic, Denmark, Estonia, Finland, Germany, Hungary, Poland, Portugal, Romania, Slovakia, and Sweden.

Following the announcement in the 2021 Spring Budget… From the 1st of April 2023, the CT rate will increase up to 25% for companies with profits over £250,000. Therefore, Patent Box will become more important to UK businesses that are developing and exploiting patented inventions.

The Patent Box incentive can turn your innovative Business, unique thinking, and out of the box ideas into a potential tax saving, helping you to acquire the maximum profit available!

‘Why now?’ you may ask. Well, as of the 1st of April 2023, if your business generates more than £250,000 in profit, you are due to experience a significant change in your corporate tax rates, increasing from just 19% to 25%! However, we have the solution!

If you submit a claim for a Patent Box, you could significantly decrease the detrimental effects of the increase as the relief allows all eligible profits to receive a lower rate of Corporation Tax by an incredible 10%!

 

Contact a member of our Team to SAVE YOUR BUSINESS today… 

THE COUNTING KING Patent Box Process

1
Discovery Meeting

This is a short meeting either via telephone or in person, in order to confirm that you are eligible for Patent Box.

2
Sign Client Agreement

This is to confirm our Terms and Conditions, NDA, and Data Protection Compliance. This is a simple form which is to be signed electronically.

3
Technical Meeting

This is to discuss which stage your Intellectual property (IP) is up to and where you are up to with submitting protection. We can then advise on projected benefits and elaborate on the necessary process to administer this until the patent has been granted.

4
Compliance Review

We will make regular check ins with your accountant in order to ensure the necessary paperwork has been completed, each time you submit your yearend accounts.

5
Submission

This is where your claim, and all of the supporting evidence we have produced is submitted to HMRC for processing.

6
Receive Benefit

Once HMRC has granted the patent, you will then receive the benefit as discussed with Counting King.     

Use Our

R&D TAX CREDITS CALCULATOR

Find Out How Much You Can Claim With Our FREE Research and Development (R&D) Tax Credits Calculator. You can even get the calculation emailed to you for future use.

R&D Tax Credits Calculator

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The Patent Box scheme is administered by HMRC! Here’s an overview of their process for claiming the Patent Box:

  1. Determine Eligibility: To be eligible for the Patent Box, a company must hold qualifying intellectual property (IP) rights, which include patents granted by the UK Intellectual Property Office, the European Patent Office, and certain other countries.

  2. Calculate Qualifying Profits: Determine the profits attributable to the patented invention. This involves identifying income streams related to the patented product or process and apportioning the profits accordingly. It’s essential to maintain accurate records and separate the qualifying profits from the non-qualifying profits.

  3. Complete The Company Tax Return: Report the qualifying profits and claim the Patent Box relief in the relevant sections of the company tax return. Provide the necessary details about the patents and their associated income.

  4. Submit Documentation: HMRC may request additional documentation and evidence to support the claim, such as patent numbers, relevant calculations, and information about the qualifying development activities. These records substantiate the claim.

  5. Review and Approval: HMRC will review the claim and supporting documentation. They may seek clarification or further information. Once satisfied, they will notify the company of the acceptance of the claim and the reduced rate of corporation tax that will apply.

  6. Apply Reduced Tax Rate: Once the claim is approved, the company can benefit from the reduced rate of corporation tax on the qualifying profits generated from the patented invention.

The reduced rate of Corporation Tax applied to qualifying profits is not the only benefit of the Patent Box scheme. While the primary feature of the scheme is the lower tax rate, there are other potential benefits associated with the Patent Box incentive. These benefits include:

  1.  Lower Tax Liability: The reduced rate of corporation tax on qualifying profits can significantly lower a company’s tax liability, allowing them   to retain more of their profits.
  2.  Increased Cash Flow: With a reduced tax liability, companies can improve their cash flow, as they retain a larger portion of their profits. This   can provide additional funds for Research and Development, investment, or other business activities.
  3.  Incentive For Innovation: The Patent Box scheme serves as an incentive for companies to invest in Research and Development activities   and protect their inventions through patents. By rewarding companies with a lower tax rate on patented inventions, the scheme   encourages innovation and technological advancement.
  4.  Competitive Advantage: Companies that hold patents and can benefit from the Patent Box scheme may have a competitive advantage   over their competitors. The reduced tax rate can enhance their financial position and support ongoing R&D efforts, allowing them to bring   new products or processes to market.
  5.  Attraction For Investors: The Patent Box scheme can make companies more attractive to investors, as it demonstrates their commitment   to innovation and potential for long-term growth. Investors may view the reduced tax rate as a positive factor when considering     investment opportunities.

Case Studies

Patent Box

How we helped a technology company receive a £38,000 tax relief!

View Case Study:

Apply now TO CLAIM PATENT BOX

Contact us today to find out if you qualify for the Patent Box incentive!

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