Lifting the Lid on the Patent Box

4th December 2013

The Patent Box is a new, preferential corporate tax regime which will apply a reduced rate of tax to profits derived from patents from April 2013.

The rate reduction will be phased in over 5 years and will apply to worldwide profits arising from both existing and new patents so that, by April 2017, the rate on Patent Box income will be 10%.

To qualify for the Patent Box regime a company must have a licence over patents granted by the UK Intellectual Property Office or European Patent Office and must have also made a significant contribution to the creation or development of the item protected by the patent.

The definition of qualifying income under the Patent Box is generous and applies to profits from sales of patented products or products incorporating the patented invention, licensing out patent rights, selling patent rights or the receipt of damages, insurance or other compensation related to patent rights.

Your company can also benefit from the Patent Box regime if it uses a manufacturing process that is patented or provides a service using a patented tool.

If you have existing or potential patents, and would like further information on the Patent Box regime and how it might apply to your company please contact the Tax Department.

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