Patent Box Update 2015

The below provides and update to our article on the Patent Box – available here.

The latest update, 1st March 2016 - available here.

Those of you who are interested in reducing your company’s Corporation Tax liability through the Patent Box may have heard mixed reviews following the G20 summit in November 2014.

But how many of you have been put off the concept of the Patent Box since the announcement that the present scheme will close to new entrants in June 2016, and be abolished by June 2021?

Rumour has it that a new Patent Box scheme which will be introduced, it is thought, by June 2016, but the new scheme will have some additional limitations, the most notable being that tax incentives will be offered only where significant R&D is undertaken in the UK and there will be restrictions on qualifying expenditure.  Interestingly, there has been no mention of any change to the 10% rate of tax on profits derived from Patents (or other qualifying IP) – which is clearly good news!

So, in a nutshell, there is no evidence that should dissuade you from seriously considering the Patent Box, especially if one can elect to enter under the present scheme before June 2016, and the revised scheme would still seem of real value to companies, even if the final details are not yet set in stone.

Remember, one can elect into the Patent Box whilst your qualifying Patent Application is pending, which may well help you to join the present scheme prior to June 2016.  The election date starts the date of relief, even though it is only formally applied after the Patent is granted.  However, there can be financial reasons why you might not wish to make the election prior to grant of the Patent, and the timing of the election is important and must be considered and discussed with your Accountants.

The combined effect of the Patent Box and R&D Tax Relief provides very useful savings for companies liable to pay UK Corporation Tax.  Are you maximising the relief your company should be receiving?

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