Patent Box

Gateley Capitus's logo Adamson Jones's logo

Achieve tax efficient innovation with the Patent Box.

The Patent Box is a government tax incentive to reward innovative UK companies who create and protect intellectual property using patents. Companies who own or exclusively licence UK patents may pay a low rate of corporation tax on profits derived from those patents. 

The reduced corporation tax rate can be applied not just to the profits from the patented item, but the sale of products or services containing the qualifying patented innovation.

Why work with Gateley? 

We are unique in providing both tax professionals and patent attorneys in one place to handle all aspects of possible Patent Box tax savings. This includes: 

  • advice on potential tax savings 
  • advice on patentability 
  • apply for and obtain patent protection 
  • apply for and obtain Patent Box tax savings 

Our tax team at Gateley Capitus will be able to manage you through the claim process, keeping your time to the minimum possible. 

Through our team of specialist patent attorneys at Adamson Jones, we can provide clear advice on aspects of your technology that might be patentable. Our patent attorneys can not only draft and file your patent application but also offer a streamlined service specifically for Patent Box to obtain a granted UK patent as efficiently as possible.

What is Patent Box?

The Patent Box is a government tax incentive designed to reward innovative UK companies who create and protect intellectual property using patents, companies who own or exclusively licence UK patents can also claim this generous benefit. 

The Patent Box may be claimed by companies in conjunction with R&D tax credits. This ensures that innovative companies are rewarded with cash tax savings, even when their R&D activities on a particular project have come to an end.

What patents qualify?

Patents granted by the following are eligible where they are owned or exclusively licensed by the company:

  • The UK Intellectual Property Office
  • The European Patent Office
  • Relevant IP authorities in these countries in the European Economic Area: Austria, Bulgaria, Czech Republic, Denmark, Estonia, Finland, Germany, Hungary, Poland, Portugal, Romania, Slovakia and Sweden.

How does the calculation work?

The Patent Box benefit calculation follows a complicated series of steps, at a high level these include the following:

  • Identify relevant IP profits using a ‘streaming’ methodology, which requires a just and reasonable apportionment of a company’s expenses.
  • Deduct a ‘routine profit’ which is a notional 10% return on certain operating expenses. 
  • Deduct profit derived from the company’s marketing assets/ brand. 
  • Multiply by the R&D fraction, which limits the benefit of the Patent Box where the company did not carry out all the relevant R&D itself.
  • The resulting figure is the amount eligible for the reduced 10% corporate tax rate.

How to claim your Patent Box benefit:

The Patent Box application process can appear complicated. We have tried to make the process as simple as possible by breaking it down into three easy-to-follow steps. 

  1. Patent identification and product technical assessment
    1. Identify any existing IP, based on granted patents from qualifying bodies.
    2. Assess the benefits of making a Patent Box election and decide on an appropriate timescale.
    3. Identify and compile a schedule of products and services that are associated with the qualifying patents and may also qualify — development of a technical justification document.
    4. Identify the relationship between R&D expenditure, qualifying patents and associated revenues.
  2. Calculation
    1. Development of a valid income streaming methodology considering the current HMRC legislation, taking advice from HMRC where applicable.
    2. Working in partnership with you to validate and agree the split between costs and R&D expenditure.
    3. Development of processes to enable the efficient capture of required data.
    4. Calculate relevant IP profit.
  3. Submit your tax return
    1. Make the election into the Patent Box scheme at the appropriate time.
    2. Include the Patent Box deduction into CT600 submission and alonside supporting tax analysis, identifying the total tax saving.

How can we help you? 

We help companies to calculate their Patent Box benefit including:

  • Assessing eligibility for the Patent Box scheme.
  • Identifying costs eligible for inclusion in a Patent Box claim.
  • Preparing both technical and financial documentation to support a companies’ Patent Box claims.
  • Agreeing these claims with HMRC.
  • Working closely with in-house patent attorneys to understand whether a product is adequately protected. 
  • With help from the patent attorneys within Gateley, providing advice on existing patents and identify opportunities for future patents.

Got a question? Get in touch.