Patent Box legislation came into effect in April 2013. It is intended to enhance the competitiveness of the UK tax system, encouraging the location of high value jobs in the UK and promoting investment and growth.
The benefit of the Patent Box initiative is a significant reduction in Corporation Tax paid on qualifying profits. The tax relief is being phased in over a four year period from April 2013. Once the full benefit of the system is in effect, the lower rate of Corporation Tax to be applied to these profits will be 10%. This 10% tax rate will therefore apply from April 2017.
In order to be eligible, potential beneficiaries must have appropriate granted patents in place that can be directly linked to a product or service generating qualifying profits.
It is an essential requirement to have granted patents in order to obtain this benefit, although the tax savings generated can be backdated to the earlier of April 2013 and the date that a patent was applied for. As we currently understand the legislation, the qualifying profits do not have to be generated by the sale of products in the UK only, but can also be from overseas sales.
Lawrie IP can advise you on how best to take advantage of Patent Box legislation.
Contact us if you have a question, or if you would like to find out more about Patent Box.
Note that this does not constitute tax or financial advice, which we are not qualified to provide. If Patent Box is of interest to you, we recommend that you discuss this with your accountant. Alternatively, we would be pleased to put you in touch with a tax accountant that has specialist knowledge of Patent Box.