Julia Barnard

Julia Barnard

Partner

Patents

The Patent Box is a new relief for companies aimed at encouraging innovation.

Income from products that have been patented or patents that have been licensed-in may only be liable to corporation tax at 10 per cent.

The reduction in the tax rate to 10 per cent will be phased in over a number of years with effect from 1 April 2013. These regulations are known as “The Patent Box”. The Patent Box is optional and an election must be actively made in order to benefit from the reduced rate of tax.

By halving the amount of corporation tax payable on these types of profits, companies will be encouraged to develop, manufacture and exploit their patents in the UK. This should, in turn, give them a competitive commercial edge in the future.

Whilst this is new legislation, FCF has in-depth knowledge of this highly complex area and it is extremely important that the appropriate profits are identified before the relevant deduction can be claimed resulting in the effective tax rate of 10 per cent.

We have been working closely with our clients in this area in advance of the changes so that they have the systems in place to enable them to identify their patent related profits.