The Patent Box
The Patent Box enables companies to apply a lower rate of Corporation Tax to profits earned from their patented inventions. Companies must elect into the Patent Box to apply the lower rate of Corporation Tax which is 10 per cent.
You can only use the Patent Box if your company:
- is liable to Corporation Tax
- makes a profit from exploiting patented inventions
- owns or has exclusively licenced-in the patents
- has undertaken qualifying development on the patents
If you elected to the Patent Box after 30 June 2016
After this date benefits are restricted if your company:
- incurred expenditure in acquiring the patents
- made payments to connected parties for their R&D expenditure
The R&D fraction shows how much this affects the calculation.
What makes a patent eligible
Your company must own or exclusively license-in patents granted by:
- the UK Intellectual Property Office
- the European Patent Office
- the following European Economic Area countries: Austria, Bulgaria, the Czech Republic, Denmark, Estonia, Finland, Germany, Hungary, Poland, Portugal, Romania, Slovakia and Sweden
Qualifying patent rights
For an intellectual property right to be a 'qualifying right', your company must also meet the development condition in relation to the patent. This means that your company must have made a significant contribution to either:
- the creation or development of the patented invention
- a product incorporating the patented invention
Find out more about Corporation Tax: the Patent Box.
Note that the Patent Box regime does not apply to profits arising from other intellectual property, such as copyright or trade marks. However, if your company holds certain other medicinal or botanic innovation rights it may be able to take advantage of Patent Box benefits.