Are you preparing for Patent Box?
28 May 2012
From April 2013, the government will introduce new tax legislation that it hopes will encourage innovation and assist recovery...
Patent Box will allow companies to pay a lower 10% rate of corporate tax on profits to qualifying IP. The qualifying IP includes patents granted by the UK and European Patent Offices, and will be extended to other EU states that have the same patent criteria.
Patent Box will apply to existing and new IP, providing the company has developed the IP or any products that incorporate it. The product only needs one patent in a product to qualify for the tax discount, and Patent Box will apply even if the changes made to products or processes are only minor.
IP company Appleyard Lees have warned that if companies wish to benefit from Patent Box they should act now to reap the full benefits of the legislation. Graham Johnson, partner at Appleyard Lees, said: “Businesses will need to look at keeping a separate record of sales of patented and non-patented products from April 2013. This means Patent Box is not a matter solely for R&D specialists and dialogue needs to be in place between accounts, sales and R&D teams to ensure businesses can take full advantage of the tax break.”
Appleyard Lees also issued five guidelines to help UK business to assess if they could be eligible for Patent Box tax breaks.
1. To qualify for Patent Box, your company needs to be based in the UK and have a UK or other qualifying European patent.
2. Patents can be obtained for relatively minor developments to existing products or processes as well as to completely new products or processes.
3. To be patentable, the development must be kept confidential until a patent application is filed and it must also be new and inventive when compared to known solutions.
4. In the UK, we expect to have a patent granted within four years of filing, although in some cases it can be as little as 18 months.
5. It can cost only a few thousand pounds to secure a UK patent and, provided that modest annual renewal fees are paid, the patent can remain in force for 20 years.