Patent Box Scheme explained
Updated: Mar 19
Here at Inovasi, we specialise in all the innovation support available to ambitious UK companies. The patent box is a major part of that. We would always advise having a specialist advise you when electing into the patent box scheme. Get in touch today for a free eligibility call with an expert.
What is the Patent Box scheme?
The Patent Box scheme is a UK tax relief scheme aimed to offer vital tax relief to innovative companies as a reward for developing, improving, and utilising intellectual property.
Initially introduced in 2013 and only in the last few years has come into full effect as of 2017, while it is still relatively new HMRC has suggested it is accomplishing it desired effect of promoting innovation which in turn should improve the overall economy of the UK.
What you get.
The Patent Box scheme allows you to get a reduction in corporation tax of up to 9%, therefore your corporation tax can be reduced from 19% to 10%, for any profits driven by IP.
For example, if you sell a product that makes an annual profit of £2500,000 normally you would pay £47,500 in tax. If this product had a patent then you would instead pay as little as £25,000, a tax saving of £22,500.
To qualify and benefit from the Patent Box scheme you must:
Be a UK limited company
Be subject to corporation tax
To own or licence a Patent or similar IP
To have performed development on the IP
Generate profit from this IP
How does The patent box scheme act with the other innovation incentives?
It is a common misconception that either you cannot claim both at the same time or that an R&D claim will reduce your patent box benefit. The patent box scheme and the R&D tax credit scheme can simultaneously be claimed, however, the two are intertwined with a very complex relationship. This is why we would always advise having an expert advise you on this, and the advisor must be an expert in both R&D and patent box legislation.
Receiving or applying for an innovation grant will not affect a patent box claim, in fact often the feasibility study or R&D project an innovation grant typically fund can aid you in developing something worthy of being patented and then later used in the patent box scheme.
What Inovasi does.
We can help you in all stages of the patent box process, taking the burden off you and allowing your team to focus on your core business while we will do all the heavy lifting in the process. We take the time to learn about you and your business so we can suggest the best solution for the company’s needs.
We can help you to review your current patentability, help you patent your technology/product/process, review suitability and eligibility, find all the allowable profits so you can maximise your benefit from the scheme.
Get in touch today for a free initial consultation.