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Patent box: Start planning now

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Under the government’s new Patent Box scheme, qualifying technology businesses can enjoy a 10 per cent rate of corporation tax – if they act before April 13, 2013.

The proposed tax relief regime and Patent Box, which take effect from April 2013, are intended to increase the UK’s competitiveness, stimulate innovation and encourage investment in the UK.

UK-based firms can therefore save tax where they generate or could generate income through patents or patented products.

“The new rules will allow UK companies to pay a lower 10 per cent tax rate on profits earned from certain intellectual property, but they must act quickly to make the most of the tax break,” says Neil Beck of Wellers Accountants.

This presents a significant opportunity for UK-based companies to save tax where they generate or could generate income through patents or patented products.   

Beck explains: “It’s a good time for businesses to consider patenting their products or technology, or using patents as a source of income. This development presents an important opportunity to revise R&D strategies to ensure the tax advantages are being fully exploited.

“If a business does decide to use the Patent Box it’s worth making sure the new income streams are recognised within the accounting systems and accounts so that the year-end figures can be separately identified and treated accordingly. A simple nominal, departmental or cost categorisation within the software should suffice.”

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