Have you heard of the government?s new Patent Box legislation? It comes into effect on the 1st of April this year, and you should not ignore it.
Designed to promote innovation and investment in the UK, Patent Box offers a reduced corporation tax rate on profits attributable to patented inventions. This new legislation provides an opportunity for companies to make the most out of their intellectual property.
Businesses need to act now, however, if they want to reap the full benefits of the legislation.
Be sure to review your products, manufacturing processes, and research and development (R&D) plans ahead of April to consider where patents might be applicable and to maximise on tax savings.
Here are five ways for companies to make the most out of Patent Box:
1. Get organisedMatching your products and manufacturing processes against your existing patents and patent applications will ensure you are ready to record profit related to patented inventions from 1 April onwards.
2. Plan aheadAssess your R&D plans and consider whether any of your other products and processes could be patented. Be mindful of the fact that a patent application must be filed while an invention is still confidential.
3. Pick a strategy to suit your companyConsider revising existing products; the lower rate of tax applies to profit from entire products even if only a small part of the product is patented. Keep in mind that a patent with a narrow scope will be enough to allow you to qualify for Patent Box. Such a patent may be more affordable and faster to obtain than a patent with broad scope, where more interaction with a patent office is required.
4. Ask for adviceThe idea behind Patent Box is simple enough, but the execution is more complex. Your patent attorney will be happy to review your product portfolio with you to match it against your existing patents and patent applications. This will identify key areas where it may be beneficial to file new patent applications.
5. Maximise on benefitsThe Patent Box legislation means that companies with pending patent applications can also benefit retrospectively once the patent is granted.
Graham Johnson is a partner at Appleyard Lees.
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