What is Patent Box?
One of the objectives of the UK Government’s Budget in 2011 was “to encourage companies to locate the high-value jobs associated with the development, manufacture and exploitation of patents in the UK, and maintain the UK’s position as a world leader in patented technologies”.
As an incentive to innovate and patent, the Patent Box was introduced. Since April 2013, companies within the Patent Box will pay corporation tax on the profits attributable to patented products and processes at 10%, rather than at the usual 19% corporation tax rate.
Companies that commercialise patents and develop new innovative patented products and processes are eligible for Patent Box.
To benefit, a company must actively hold a patent that has been granted by the UK Intellectual Property Office (UKIPO), the European Patent Office (EPO), or by certain other EU national patent authorities, and the company must receive income relating to that patent. The meaning of “holding a patent” is given a wide definition under the legislation – it includes legal ownership, an exclusive licence to exploit a patent, partnership, joint venture and cost-sharing arrangements and income from the sale of a patent.