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Assisting in applying for patents to the UK Intellectual Property Office and securing maximum patent box tax relief

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The UK Patent Box is a very generous, but under claimed relief which was introduced into the UK in 2013. It was introduced to incentivise companies to retain and commercialise existing patents, and to develop new innovative patented products. It does this by taxing the profits generated from qualifying patents at a reduced rate of 10%.

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Our specialist team will carry out the complex calculations needed to determine the amount available for patent box relief. Where a claim is available, a deduction is claimed in the company’s tax computation to give an effective tax rate on qualifying intellectual property profits of 10%. This represents a significant tax saving when compared to the current rate of corporation tax.

The Patent Box rules were amended on 1 July 2016, although grandfathering provisions will apply until 30 June 2021. The main change was to add a link between the patent on which the relief is being claimed and the company carrying out the R&D. Our experienced team  will carry out the additional work required in calculating the relief available.

A beneficial aspect of the relief is that it applies to profits from the worldwide sales of patented products, even if the patent only applies to a small part of the total product. It can also apply where patents have been acquired, but there are some additional conditions to meet and the relief may be restricted under the revised rules.

Who and what qualifies for the Patent Box regime

Patents can only qualify if they are granted by the UK Intellectual Property Office, the European Patent Office, or specified EEA countries. The regime notably excludes patents granted by patent offices in France, Spain, Italy, the US, and Japan.

The benefit of the Patent Box is available through legal ownership of the patent or through holding an exclusive licence to commercially exploit a patent.

The regime can apply to existing, newly granted or acquired patents, however the UK claimant company must have had, or intend to have, a significant involvement in development of the patented invention, or a product incorporating the patented item. If this development condition is only met because of activities of another group company, the claimant company must also actively manage its portfolio of qualifying patent rights. This may include activities such as protecting the patent, researching alternative applications for the patent or licensing others to use the patent.

Our specialist team will review all aspects of existing and newly acquired patents to establish if they qualify for the relief.

How to claim

An election into the Patent Box regime must be made by the company within two years after the end of the relevant accounting period in which relief is claimed. A company can elect in early, before a patent has been granted, to enable the company to claim tax relief on qualifying profits generated in the period from filing the patent application and the patent grant – the patent pending period. The accumulated relief is claimed in the tax return for the year the patent is granted.

What Onyx can do for you

The Patent Box may be complex but the savings can be substantial. In order to maximise the benefit of the regime, it is worthwhile taking the time to consider the issue now.

We can help review your patents, pending patents and development activities to determine whether or not they fall within the UK Patent Box Regime and advise you on how Patent Box relief can be claimed in your tax returns.

Contact us now for a free no obligation consultation

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