The Patent Box

Several years ago, the Patent Box tax system came into effect in the UK which allows companies to claim a reduction in Corporation Tax for worldwide profits relating to patented technology. The objective of the Patent Box is to encourage businesses to invest in the UK and increase the development, manufacture and exploitation of patents. This new tax system progressively reduces Corporation Tax to an effective rate of 10% for revenue that can be attributable to patented technology.

Qualifying profits that can be taxed at the lower rate include profits derived from the sales of a patented product (even if only a part of the product is patented), sales of products manufactured by a patented process, royalties generated from the licensing or sale of a patent, and damages awarded in patent infringement cases.

This means that companies who were previously put off by the cost of applying for a patent can now measure that cost against the money that they will save in Corporation Tax by commercialising their technology over the 20-year life of the patent.

For any aspect of Intellectual Property advice and overall strategy, please get in touch with the ip21 team.

Richard Jones, Business Relationship Manager for ip21 Ltd.