What is Patent Box & how do I qualify?
Patent Box is part of the government’s growth agenda. It presents a financial incentive to develop and commercialise innovative technology in this country. Put simply, the government wants to pay companies to invest in innovation and the Patent Box scheme is one of the tools it’s deployed to do that.
Patent Box enables UK companies to pay a reduced Corporation Tax rate of 10% on profits resulting from the sales of products or services containing a qualifying patented innovation. Many patented inventions are often small technical improvements on existing products or processes, which can yield substantial returns. HMRC have reported that £942m has been claimed through Patent Box relief in 2016/17. With 1,025 claims made; only 3% of companies with eligible patents and claiming R&D tax credits are taking advantage of this benefit.
of eligible companies claiming both R&D and Patent Box
companies claimed Patent Box in 2016/17
average claim value
What our clients say…VIEW CASE STUDIES
“Revenue generated from these claims helps us to maintain the profitability of the company – as well as keeping the owner happy, which is essential. This then allows us to continue to invest in R&D and develop new products.”Ray Hillhouse General Manager of Morgana Systems
“For a company like mine, working with MPA has made a really positive impact. They have the expertise to take the complexity out of government tax schemes designed to help business invest and grow and the experience to ensure that other related schemes, like R&D tax credits, are combined to maximise the benefit to tp24. With MPA’s help we can use these reliefs with confidence.”Shaun Davis Managing Director at tp24
3 stage delivery process
Our aim is to make the application process as easy as possible and as part of our 3 stage delivery process we conduct on site client meetings to understand the technical aspects of the patent and to evaluate its value.
1Patent/product technical assessment
- Work together to identify and validate your existing IP along with your current / planned innovation projects across your business and group
- Assess the potential benefit of making a Patent Box election and determine the appropriate time frame considering the new rules and transitional arrangements
- Compile a schedule of products and services that are associated with the qualifying patents or may qualify because they are sold alongside other qualifying products or services
- Document the engineering justification for all products and services identified in relation to the qualifying patents
- Define the valid relationship between R&D expenditure, qualifying patents and associated revenues
- Develop a valid income streaming methodology and where required gain comfort from HMRC regarding key aspects
- Validate and jointly agree the apportionment of costs and R&D expenditure
- Help you to implement internal processes to capture required data
- Apply current legislation to calculate Relevant IP Profit
3Submit your tax return
- Make the election to join at the appropriate time
- Integrate Patent Box deduction into your year-end tax computation and provide supporting tax analysis
- Identify the total tax saving
- Receive your benefit from HMRC
Industrial experience and expertise
Ready to get started with your claim?
If you are ready to make a claim, speak to one of our tax experts or for more information about Patent Box, visit our resources section.
Learn about how to make a claim
We know that R&D and Patent Box can seem confusing. So, for answers to your questions visit our knowledge hub.