{"id":5710,"date":"2024-05-01T12:41:09","date_gmt":"2024-05-01T12:41:09","guid":{"rendered":"https:\/\/www.bainesjewitt.co.uk\/blog\/?p=5710"},"modified":"2024-05-01T12:41:11","modified_gmt":"2024-05-01T12:41:11","slug":"everything-you-need-to-know-about-patent-box","status":"publish","type":"post","link":"https:\/\/www.bainesjewitt.co.uk\/blog\/everything-you-need-to-know-about-patent-box\/","title":{"rendered":"Everything you need to know about Patent Box"},"content":{"rendered":"<p>One of the main ways that the Government encourages the use and commercialisation of innovative intellectual property is through tax relief.<\/p>\n<p><!--more--><\/p>\n<p>The Patent Box is one such scheme, designed to provide a lower rate of Corporation Tax to profits earned on patented inventions.<\/p>\n<p>Companies which elect into the Patent Box can benefit from a 10 per cent rate of Corporation Tax, provided they meet certain criteria:<\/p>\n<ul>\n<li>Liable to Corporation Tax<\/li>\n<li>Owns or has exclusively licenced-in the relevant patent<\/li>\n<li>The patent licence is granted by either the UK Intellectual Property Office, the European Patent Office or by the relevant body in certain European Economic Area nations<\/li>\n<li>Undertake qualifying development of the patent \u2013 meaning they have been involved in the underlying innovation or application of a patented invention.<\/li>\n<\/ul>\n<p>Corporation Tax rates within the Patent Box will only apply to profits made from exploiting patents, not all profits made by the company.<\/p>\n<p><strong>Which profits qualify?<\/strong><\/p>\n<p>The proportion of your profits which qualify for reduced Corporation Tax will depend on the number of patents you own and whether you earn profits through other commercial activities.<\/p>\n<p>Qualifying profits are classed as \u2018intellectual property income\u2019, and must come from at least one of the following:<\/p>\n<ul>\n<li>Selling patent rights<\/li>\n<li>Licencing out patent rights<\/li>\n<li>Infringement income<\/li>\n<li>Selling patented products, including bespoke parts and products incorporating the patented invention<\/li>\n<li>Manufacturing using a patented process<\/li>\n<li>Providing a service using a patented tool<\/li>\n<\/ul>\n<p>To make identifying qualifying profits easier, you should consider keeping a separate record of profits made on patented inventions.<\/p>\n<p><strong>How do I elect into the Patent Box?<\/strong><\/p>\n<p>Your company must elect into the Patent Box to benefit from a reduced rate of Corporation Tax \u2013 within two years of the end of the accounting period in which the qualifying profits were made.<\/p>\n<p>You can do this either in the computations accompanying your Company Tax Return or separately to HM Revenue &amp; Customs (HMRC) in writing.<\/p>\n<p><strong>What if I hold the licence of a patent?<\/strong><\/p>\n<p>Some businesses choose to purchase a licence to use a patent instead of owning it outright, known as licencing-in.<\/p>\n<p>Although you don\u2019t legally own this patent, profits generated by a licenced-in patent may qualify under the Patent Box if you meet all of the following conditions:<\/p>\n<ul>\n<li>You have the right to develop the patented invention and to exploit it commercially<\/li>\n<li>One or more rights under the agreement is exclusive to your business<\/li>\n<li>You have exclusive rights throughout an entire national territory<\/li>\n<\/ul>\n<p>You must also either be able to defend the rights of the patent by way of infringement proceedings or be entitled to the majority of damages awarded under successful proceedings.<\/p>\n<p><strong>Is the Patent Box right for my business?<\/strong><\/p>\n<p>If you meet the criteria and seek to commercially exploit a patented invention, then your business should consider electing to the Patent Box.<\/p>\n<p>It provides a significant financial incentive to continue to innovate and improve the products, services and processes within your sector.<\/p>\n<p>Tax reliefs under the Patent Box can be an excellent addition to a tax planning strategy, particularly for the most innovative businesses which draw substantial profits from patented inventions.<\/p>\n<p><strong>We can advise you on the Patent Box and other tax reliefs available to your business. Contact our team today to find out how we can streamline your business taxes. <\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>One of the main ways that the Government encourages the use and commercialisation of innovative intellectual property is through tax relief.<\/p>\n","protected":false},"author":2,"featured_media":5713,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/5710"}],"collection":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=5710"}],"version-history":[{"count":1,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/5710\/revisions"}],"predecessor-version":[{"id":5711,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/5710\/revisions\/5711"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media\/5713"}],"wp:attachment":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=5710"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=5710"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=5710"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}