Ah tax! Although a necessary cross we all must bear, it doesn’t stop it from being the t-word that we all sigh about and consider the bane of our perpetual working lives. Good news is however, on the horizon for companies who own intellectual property rights to patents, and it comes all wrapped up in a (Patent) Box.
What’s in the Box?
The Patent Box is a regime which affects corporation tax based on intellectual property ownership. The aim is to encourage development and innovation in areas with promising potential for patentable protection. According to HM Revenue and Customs, areas most likely to produce such innovative inventions include pharmaceuticals, life sciences, manufacturing, electronics and defence sectors. It is believed that increased jobs stemming from development, production and implementation of patents in the UK will aid in preserving a competitive home advantage and keep the UK in first place in the global patented technology competition, as well as encouraging investment and economic growth.
What does it do?
Companies will optionally be able to select paying a 10% corporation tax rate to profits stemming from qualified patents. The regime is not only limited to patents, and may also include
- exclusivity rights
- supplementary protection certificates
- plant variety rights
Profits not stemming from these intellectual property rights will still be taxed at the main rate.
As a company, what do I need to know?
- The regime will impact profits made on and following 1st April 2013.
- IP that qualifies for falling into the box is limited to patents granted by the UK IPO and EPO and points (1) to (3) above. The regime may later be extended to EU member states with similar IP processes and requirements to that of the UK.
- Exiting IP, new IP and advanced developments in acquired IP are all applicable.
- Calculation details may be found here.
- The regime is not expected to have an impact on individuals.
- A minimum of one patent over a product is required (this in the hopes that the IPO not be too inundated with applications – great job creation for more patent examiners though).
- A bit of complex admin is likely to crop up, but the benefits may well be worth the drudgery!
Some loose ends to tie up the Box
A bit of clarity and light-shedding on issues such as companies’ tax loss or break-even positions still appear to need attention in terms of calculation schemes, but the Patent Box looks to be a promising initiative. It seems those who are employed to think out of the box are, ironically, most affected by what’s in this Box!
If you have an idea that you think may prove patentable, the first step is to look to see if anyone else has had that same idea. We offer patent searching services that do just that. If you’d like to understand more about how your business can benefit from Patent Box, do give us a call on 0203 086 8110.
By Ghabiba Weston
Would an enterprise operating in the UK qualify for ‘Patent Box’ benefits if the UK IPO granted patent were derived from a US PCT ?
Providing the company is paying corporation tax and therefore has operations within the UK, and that the patent is granted in the UK or Europe, then they should qualify for this tax saving from April 2013.