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Use the Patent Box to reduce your corporation tax
06 May 2024
(3 min read)
The Patent Box is a UK government initiative aimed at encouraging companies to retain and commercialise intellectual property within the country. This scheme allows eligible companies to apply a significantly reduced Corporation Tax rate of 10% on profits earned from patented inventions, which is substantially lower than the standard 25% rate.
This opportunity is not limited to patent owners alone; holders of exclusive licenses can also benefit, provided they meet certain conditions.
Benefits of the Patent Box include:
- A lower tax rate on profits derived from patented products and technologies, which can include everything from the products themselves to royalties and damages received from patent infringements.
- An incentive to keep innovative activities within the UK, thereby boosting local investment and job creation.
- Potential application to profits over the life of the patent, up to 20 years, offering long-term financial benefits.
Case Study
Bucher Municipal is a leading supplier of municipal vehicles and equipment. They focus on developing intelligent solutions that integrate smarter technologies and alternative energy sources, which sets them apart in their field.
Recently, Bucher Municipal achieved a significant milestone by obtaining a patent on their core product range. Nigel Brunning, Director at Bucher Municipal, shared their experience with implementing the Patent Box to leverage this achievement: “We had just been successful in obtaining a patent on our core product range; it was therefore important that we found a company that could offer an effective Patent Box service. This was the initial reason that convinced us to give VISIATIV a try. It was a new opportunity that we could not afford to miss.”
The company appreciated the structured and efficient approach taken by Visiativ, particularly during the data collection process which is crucial for Patent Box benefits. Brunning noted, “The data collection process was well structured and efficient, which we really appreciated.”
Electing into the Patent Box has proven beneficial for Bucher Municipal, impacting their business significantly by optimising their tax savings and reinforcing their commitment to innovation. “Electing into Patent Box has now led us to select VISIATIV for our R&D expenditure credit evaluation to ensure we are ready for the new, more stringent HMRC reporting requirements.”
How about combining Patent Box and R&D Tax Relief?
While R&D tax relief offers deductions or credits against spending on research and development, the Patent Box specifically targets profits earned from patented innovations. Combining these can optimise a company’s tax position. For instance, while R&D tax relief fosters initial development, the Patent Box incentivises the commercial success of these innovations, creating a comprehensive support system for businesses engaging in R&D and bringing these innovations to market.
How Visiativ can help:
Visiativ aids clients in navigating the complexities of the Patent Box. We offer:
- Assessments to determine if your IP qualifies for the scheme.
- Preparation of detailed calculations and reports needed for claiming the Patent Box relief.
- Advice on managing both R&D tax relief and Patent Box benefits to optimise tax advantages.
Our team ensures that you understand every step, from initial eligibility checks to final submissions. We’re here to help every step of the way, to make the process as easy as possible for you.
If you have any questions relating to Patent Box or wish to further discuss how it might benefit your own business, please get in touch with VISIATIV, and a representative will get back to you to discuss your unique needs and explain how we can assist.
