Will your company pay less tax from April 2013?
February 21, 2013
Does your company hold patents? Or use exclusive licenses over patented products/processes? If so, from 1 April 2013 your company could make considerable Corporation Tax savings from the new Patent Box regime.
Patent Box will enable companies to pay tax at 10% rather than at least 20% on qualifying profits.
The profits which potentially qualify if you hold a patent are extensive. HMRC give the example of a patented printer cartridge. If the patented cartridge is sold as part of a single package with a non-patented printer, profits from the whole package (as calculated using the Patent Box rules) will qualify for the lower tax rate even though the printer itself is not patented!
To qualify for the regime your company must firstly own or hold an exclusive licence over a patent granted by the UK Intellectual Property Office, the European Patent Office or one of the other HMRC approved countries. Note that US patents do not qualify!
Secondly your company or another group company must have undertaken qualifying development work in respect of the IP covered by the patent.
Things to consider before 1 April 2013:
– Identify patents held by your company (if you are unsure to whether your company holds patents you can run a search at by typing the company name in the “applicant” box)
– Identify any patents pending which could deliver a benefit when granted
– Are all existing patents still valid
– Identify any patented products/processes used by your company, but for which the intellectual property is owned by another entity (for example the patent might be held by another group company). Would it be possible to put an exclusive licence in place over the patented product/process?
– Should your company be making patent applications for new IP?
– Can you track qualifying income and costs accurately?
If you would like to discuss the types of income/profits which qualify. Or have any other Patent Box queries please don’t hesitate to contact me.