Opening up the patent box - Palmers Solicitors

Opening up the patent box

A patent box regime is set to come into force from April 2013 that will allow eligible companies to benefit from a 10 percent rate of corporation tax on all the profits arising from qualifying patents – whether through royalties or as part of the sale price of products – and other intellectual property rights.

All patents granted by the UK Intellectual Property Office (IPO) and the European Patent Office (EPO) will be covered by the legislation, as well as those granted by EU national patent offices where the patentability criteria are similar to those in the UK.

The regime will be phased in over four years, with the 10 percent rate applying to 60 percent of the qualifying profits in the first year. This will rise incrementally by ten percent each year, reaching 100 percent from April 2017.

Consequently, companies looking to make the most of this regime should ensure that each of their new products is protected. This will make sure that as much of the company’s profits as is possible will be covered by the patent box, and thus liable for the ten percent tax rate.

In addition, as the patent box regime only applies to granted rights (and not pending applications), it is worth pursuing both UK and European rights separately. With the IPO process taking less than four years – compared to six or seven years for the

EPO – this can result in products qualifying for the patent box rate more quickly.

At Palmers, we regularly advise on intellectual property matters, so please contact us for more information.