CASH BACK from R&D expensed


If you sell products that you have patented then some good news  – be aware of  the new tax benefits that the Government is making available from April next year.

10% Corporation Tax on Profits from Patented Products from April 2013

10%. This is the reduced rate of tax the Government has introduced for profits from sales of patented products with effect from April 2013. It is called Patent Box.

Patent Box will complement existing valuable tax incentives for Research and Development (R&D). As the UK looks for vehicles to boost its economy, this provides a further tax incentive for the commercial exploitation of patented products and inventions.

The Patent Box proposition is generous. Broadly, the 10% tax rate will apply to worldwide profits arising from UK patents and patents granted by the European Patent Office, or from an exclusive licence over such patent rights.

Seizing the opportunity

While the intention is that the 10% tax rate will be available regardless of how the company exploits its patent rights, the challenge will be finding the time and resources to get claims in. Specialist tax advice is on hand to ensure you don’t miss out on this opportunity.

Eligible Patent Box profits can arise from various income sources including:

  • Sales of patented products
  • Sales of products incorporating patented items
  • Sales of bespoke parts for such products
  • Licence fees or royalties for granting rights over patents or other associated IP rights
  • Income from the sale of patent rights or exclusive licenses over patent rights
  • Income received as damages for infringement or alleged infringements of patented rights
  • Deemed “notional royalty” income for patented tools and patented processes used to create non-patented services or products for sale.

Critically, any claim must be made in advance. Patent Box is optional and will not apply automatically; it must be actively claimed in the company tax return. A valid R&D tax claim will not only reduce the company’s total taxable profit, but will move more of that taxable profit into the 10% Patent Box zone.

Specialist tax advice needs to be taken at the earliest opportunity for companies involved in patented or in the patent pending period.

For further details contact: warren palmer on 01628 668811




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