Patent Box Tax Relief
In 2009, in an effort to further reward innovative companies, the UK Government announced an initiative called “the Patent Box”. This legislation gives a reduced effective rate of corporation tax to 10% for any companies making an income from patents. The relief has been phased in from 1 April 2013 and the full benefit of the Patent Box has been available from 1 April 2017.
In 2015/16, a total of 1,160 companies claimed relief under the Patent Box with a total value of £754.3 million. The number of claims for 2016/17 so far is 1,025 with a value of £942.5 million, however, there are still hundreds of eligible companies who have not claimed!
Your company will qualify for Patent Box Tax relief if:
- you own patents;
- you own an exclusive licence to exploit a patent;
- it's a UK, specific EEA country or EU patent; or
- there are no other intellectual property - not trademarks, designs, copyrights, etc.
Qualifying income includes:
- sales of patented items, or those that incorporate a patent;
- license fees;
- proceeds from the sale of patents; or
- compensation income of infringement of owned rights
What is not included in the Patent Box Tax Relief is:
- income from regular activities (that is income earned regardless of patent rights); and
- income from marketing asset return (that is income earned from branding rather than technological innovation).