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Intellectual Property value creation and the Patent Box
Intellectual Property (IP) often arises from having undertaken R&D and is one of the most valuable assets a business owns. It is therefore vital to have a defined strategy for both its’ development and protection to ensure the benefit generated is fully maximised. Its’ protection should be at the forefront of any business strategy to ensure this hard work is rewarded, enabling you to increase the marketability of your invention, gain competitive edge and maximise commercial gains.
There is a misconception that the process of identifying, drafting and protecting ideas and novel solutions is time consuming, costly, uncertain and subject to workarounds. However, working with a results-orientated advisor with a proven track record of success and an experienced team of intellectual property experts is invaluable.
Our comprehensive IP services are delivered in conjunction with one of the UK’s leading Patent Attorney firms to ensure the right balance of technical, legal and tax specialists. Our service is predominantly focused on helping our clients invent, protect and commercialise their ideas, combining valuable expertise and offering a unique service.
We deploy the following 3-stage approach:
TYPES OF INTELLECTUAL PROPERTY
Intellectual Property is the creation of ideas, knowledge and information (such as inventions, designs, names and images) and is protected by law via trademarks, copyrights, patents and trade secrets, all of which are recognised as intangible assets known as intellectual property rights (IPR), as they provide specific legal rights which protect the IP owner.
| IPR | Covers | Need to apply | Maximum duration |
|---|---|---|---|
|
Patent |
Inventions |
Yes |
20 Years |
|
Copyright |
Literary, musical, artistic works and software |
No |
70 Years after death of author |
|
Registered Design |
Image – look and feel |
Yes |
25 Years |
|
Registered Trademark |
Name, logo |
Yes |
Unlimited |
|
Confidential Information |
Unpublished secret information |
No |
Unlimited |
|
Database Right |
Databases |
No |
15 Years |
What is Patent Box?
Patent Box is a valuable UK tax incentive that enables qualifying businesses to benefit from an effective Corporation Tax rate of just 10% on profits attributable to patented inventions and certain other qualifying intellectual property.
With the main Corporation Tax rate currently at 25%, the scheme offers significant potential tax savings for businesses developing and commercialising innovative products and technologies. Reviewing your intellectual property portfolio could help identify valuable tax relief opportunities that may otherwise be overlooked.
Who qualifies for Patent Box?
To qualify, a company must be subject to UK Corporation Tax, own or hold qualifying exclusive licences to eligible patents, and satisfy the relevant development conditions.
Eligible patents include those granted by the UK Intellectual Property Office (UKIPO), the European Patent Office (EPO) or patent offices in certain specified European Economic Area (EEA) countries. Companies belonging to a group must also satisfy additional active ownership requirements.
What profits can qualify?
Patent Box relief can apply to profits generated from qualifying patented products, products incorporating patented components, patent licensing income and certain other forms of income arising from the commercial exploitation of patented inventions.
Importantly, even where a patented invention represents only a small component of a larger product, revenue from the sale of the entire product may qualify as relevant Patent Box income, subject to the applicable conditions.
However, the reduced 10% rate applies only to qualifying profits calculated under the Patent Box rules, taking account of relevant expenditure, routine profits, marketing-related returns and the R&D expenditure fraction where applicable.
Can Patent Box Relief be claimed retrospectively?
Companies must make a formal election into the Patent Box regime, generally within two years of the end of the relevant accounting period.
Although a qualifying patent must ordinarily be granted before the associated tax benefit can be obtained, businesses with pending patent applications may elect into Patent Box before the patent is granted.
Once the patent is granted, qualifying profits generated during the patent-pending period may be brought into the Patent Box calculation, potentially covering up to six years before the patent was granted, provided the relevant elections were made within the applicable deadlines and all eligibility conditions are satisfied.
This makes early consideration of Patent Box particularly important for businesses developing and commercialising innovations while patent applications are still pending.
Patent Box
OUR PATENT BOX SERVICE
Our highly skilled and experienced team of intellectual property, technical and taxation professionals work with companies to identify all qualifying activities and associated expenditure. We use a bespoke claim methodology to ensure the claim is legislatively robust and the value of the entitlement is fully maximised and choice of methodology aims to keep time investment to a minimum, ensuring day-to-day business activities are not affected as a result.
As Patent Box can be claimed in conjunction with other schemes such as R&D Tax Credits and Capital Allowances, engaging a specialist who takes a holistic approach will ensure the maximum tax benefit is claimed and incorporated in the company’s tax return.
Start the conversation
To ensure you are receiving the Government funding you are entitled to, speak to Innovation Tax today.
Contact us now for a free consultation.