Patent Box

• We can review current IP portfolios and map existing products to qualifying IP rights to help assess potential Patent Box benefits.
• We can assess whether there are any gaps in an existing IP portfolio and work to identify any undisclosed IP that may be protected in order to gain Patent Box benefits for products not currently covered by a qualifying IP right.
• We can work with technical teams and finance teams to optimise R&D investment to capture IP that can be protected by qualifying IP rights and which covers products for which Patent Box benefits meet any threshold cost-benefit measure.
• We can assist in providing the required patent-product maps and legal opinions required for a successful Patent Box claim.
• We can assist in resolving any complicated legal issues that may hold up your Patent Box claim.
• We can advise on a suitable corporate structure to help maximise the potential Patent Box benefits. 
• We can draft and apply for patents directed to your inventions to qualify for Patent Box.

Initially the Patent Box reduced the rate of corporation tax for a portion of the patent profits to 14% for the 2013 tax year. The rate was then reduced by a further 1% each year to the current rate of 10% (as of on 1 April 2017).

The exact calculations to determine the reduction in tax can be complex. In essence, to calculate Patent Box reduction in corporation tax, accountants calculate ‘patent related’ profit, which is the profit relating to products or services covered by a granted patent in a qualifying jurisdiction. From this ‘patent related’ profit, they deduct a routine or expected profit (i.e. if no patents existed) and then deduct the brand value (i.e. any profit attributable to your brand alone). This will result in an amount on which only a reduced corporation tax rate is payable. The Government’s intention is that, as of 2017, non-‘patent related’ profit is taxed at 25% while ‘patent related’ profit is taxed at 10%.

To qualify for Patent Box, a company must have made a significant contribution to either the creation or development of the patented invention or a product incorporating the patented invention. The patent must have been granted by the European Patent Office (EPO), UK Intellectual Property Office (UKIPO), or one of 13 EU states.

Companies will also qualify if the patent has been in-licensed on an exclusive basis. Pending patents are not eligible for patent box, however, once the patent has been granted, profits from up to six years prior to the date of grant (relating to the patent) may be granted tax relief.