"Patent Box" and the potential need for action soon

"Patent Box" and the potential need for action soon


Before you disregard this note thinking that it might not apply to you (perhaps because you don’t currently hold or use any patents), please consider if your company could potentially obtain a patent.  If there is a possibility of establishing a patent, then the remainder of this article should be digested carefully as part of some potentially very valuable corporation tax planning.

“Patent Box” is a new tax initiative, being phased in over several years, designed to encourage UK companies to register patents with the UK Intellectual Property Office (or with the corresponding agencies in one of 13 other European Countries).

Where the various conditions apply, profits which accrue from the use of the patent(s) are capable of enjoying an effective rate of CT of only 10% compared to the nominal rate of 20%.

UK corporate taxpayers need to be aware, however, that the “generosity” of this tax initiative was challenged by EU partners and that, as a result, for UK companies who are not elected into the current regime after 30 June 2016, a watered down regime is to be substituted, one which will tie the tax reduction to tougher conditions.

Accordingly, for those companies who have a patent already or could obtain one (whether essential or not, commercially) it is likely to be highly desirable to take action now to get into the regime before 30 June 2016.  If you are unsure whether you are able to obtain a patent we are able to assess this for you.

If you believe your company has the chance to benefit or if you would like more information please contact our Tax Partners, Steve Crompton or Chris Barrington on the details below:

Steve Crompton
Partner – Head of Tax
direct dial: 01942 292541
mobile: 07790 840394
email: steve.crompton@jsllp.co.uk

Chris Barrington
Tax Partner
direct dial: 01942 292505
mobile: 07730 436070
email: chris.barrington@jsllp.co.uk