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Patent Box

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Patent Box

Reduce your Corporation Tax to 10% with MPA

Patent Box is a government scheme that pays businesses to invest in innovation. This could enable you to pay a reduced Corporation Tax rate of 10% on profits — if they come from the sale of products or services containing a qualifying patented innovation. And yet, with 1,025 claims made; only 3% of companies with eligible patents and claiming R&D tax credits are taking advantage of this benefit. We want to change this.

A worked example / What you need to know / Old vs. New rules / When to elect / 5 things you should know

How do I qualify

If you have a patent you could be eligible to claim through Patent Box. Many patented inventions are often small technical improvements on existing products or processes, which can yield substantial returns. To find out if you could be benefitting, please get in touch and one of our experts will talk you through the process.

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, Morgana Systems

3 step process

The Patent Box application process can seem daunting. But we’ve made it as simple as possible by breaking it down into three easy-to-follow steps. We’ll work closely with you at every stage to ensure your application has the best chance of success.

Patent / product technical assessment

We’ll work with you to identify and validate your existing IP, along with any current or planned innovation projects.

Next, we’ll assess the benefits of making a Patent Box election, and decide on an appropriate timescale.

We’ll then compile a schedule of products and services that are associated with the qualifying patents and may also qualify — and we’ll document an engineering justification for them.

Lastly, we’ll define the relationship between R&D expenditure, qualifying patents and associated revenues.

Forensic accounting

We’ll develop a valid income streaming methodology, with advice from HMRC where needed.

Then, together we’ll validate and agree the split between costs and R&D expenditure.

We’ll help you put processes in place to capture the required data.

And then, we’ll apply current legislation to calculate Relevant IP Profit.

Submit your tax return

Together we’ll make the election to join at the appropriate time.

We’ll integrate the Patent Box deduction into your year-end tax breakdown and provide supporting tax analysis, identifying the total   tax saving.

You’ll receive your benefit from the HMRC.

Why get a patent?

A patent can cost as little as £5,000 and be granted in 9 months.

 

When measured against the Corporation Tax saving that could last for 20 years, the benefits are huge.

Remember, the tax reduction can be applied to worldwide revenues and companies can make the most of the tax regime whilst still preventing their invention from being copied. View a patent box claim worked example.

 

Old rules vs new rules

From 1st July 2016, the UK Patent Box regime was changed.

 

Under the previous Patent Box rules, as long as a UK company owns a UK or EU patent (or exclusive rights to that patent), all worldwide sales derived from that patent going into the UK company may be included in a three-step Patent Box calculation to produce the Relevant Intellectual Property (IP) Profits. There was no requirement for a connection to be made between the underlying R&D activity and the Patent itself.

Although the basic calculation for Patent Box remains the same, the modified rules include an additional calculation based on a ‘modified nexus’ approach, linking relevant R&D expenditure to the patent or patented item. This has made it necessary for companies to ‘track and trace’ their R&D spend and map the data to their IP.

 

How to make a claim

Let’s get started

If you’re ready to make a claim, or you have any questions about Patent Box, now’s the time to get in touch. Our experts can give you all the help and information you need to start you on your way to great financial gains.

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