Patent Box

This is a tax relief initially launched in 2013 that enables companies earning profits from goods and/ or services that have been patented (in either the UK or the European Patent Office) to qualify for a lower tax rate.

Following German objections, the UK Government has recently announced that the relief will be modified with effect from claims submitted after 30 June 2016. The new Patent Box rules, whilst remaining beneficial, are more complicated than the current rules and are unlikely to be as generous particularly given that the intention is to create a closer link between the UK tax relief and the work carried out in the UK – as the current rules are more relaxed on this distinction.

However, it is still possible to elect into the current rules. If the current rules are elected prior to 30 June 2016, the company can remain within the current rules until June 2021. Early election by qualifying companies into the Patent Box is therefore recommended to ensure that the current rules can be accessed until June 2021.

There are crossover linkages with R&D tax relief and we can advise on all aspects.